10-K 1 self-10k_20191231.htm 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-12681

GLOBAL SELF STORAGE, INC.

(Exact name of registrant as specified in its charter)

Maryland |  | 13-3926714
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)

Global Self Storage, Inc.

11 Hanover Square, 12th Floor

New York, NY 10005

(212) 785-0900

(Address, including zip code, and telephone number, including area code, of Company’s principal executive offices)

Donald Klimoski II, Esq.

Global Self Storage, Inc.

11 Hanover Square, 12th Floor

New York, NY 10005

(212) 785-0900

(Address of principal executive officers, including zip code, and telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  |  | Name of exchange on which registered or to be registered
Common Stock, $0.01 par value |  | SELF |  |  | The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐ NO ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer |  | ☐ |  | Accelerated filer |  | ☐
Non-accelerated filer |  | ☒ |  | Smaller reporting company |  | ☒
Emerging growth company |  | ☐ |  |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The aggregate market value of the common stock held by non-affiliates of the registrant was $26,953,819 based upon the closing price of the shares on the Nasdaq Capital Market on June 28, 2019, the last business day of the registrant’s most recently completed second fiscal quarter. This calculation does not reflect a determination that persons whose shares are excluded from the computation are affiliates for any other purpose.

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of March 16, 2020, was 9,330,297.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement to be issued in connection with the registrant’s annual stockholders’ meeting to be held in 2020 are incorporated by reference into Part III of this Annual Report on Form 10-K.

Table of Contents

PART I |  |
| Item 1. | Business |  | 5
| Item 1A. | Risk Factors |  | 10
| Item 1B. | Unresolved Staff Comments |  | 26
| Item 2. | Properties |  | 26
| Item 3. | Legal Proceedings |  | 28
| Item 4. | Mine Safety Disclosures |  | 28
PART II |  |
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 29
| Item 6. | Selected Financial Data |  | 29
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 30
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |  | 46
| Item 8. | Financial Statements and Supplementary Data |  | 46
| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |  | 46
| Item 9A. | Controls and Procedures |  | 46
| Item 9B. | Other Information |  | 47
PART III |  |
| Item 10. | Directors, Executive Officers and Corporate Governance |  | 48
| Item 11. | Executive Compensation |  | 48
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 48
| Item 13. | Certain Relationships and Related Transactions, and Director Independence |  | 48
| Item 14. | Principal Accounting Fees and Services |  | 48
PART IV |  |
| Item 15. | Exhibits, Financial Statement Schedules |  | 49
| Item 16. | Form 10-K Summary |  | 52
SIGNATURES |  | 52

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STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information presented in this Annual Report on Form 10-K (this “annual report”) may contain “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the Company’s plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as “believes,” “plans,” “intends,” “expects,” “estimates,” “may,” “will,” “should,” or “anticipates,” or the negative of such terms or other comparable terminology, or by discussions of strategy. All forward-looking statements by the Company involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Company, which may cause the Company’s actual results to be materially different from those expressed or implied by such statements. The Company may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by the Company or on its behalf, are also expressly qualified by these cautionary statements. All forward-looking statements, including without limitation, the Company’s examination of historical operating trends and estimates of future earnings, are based upon the Company’s current expectations and various assumptions. The Company’s expectations, beliefs and projections are expressed in good faith and it believes there is a reasonable basis for them, but there can be no assurance that the Company’s expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. Except as required by law, the Company undertakes no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks referenced in “Item 1A. Risk Factors” and in our other filings with the Securities and Exchange Commission (the “SEC”). Such factors include, but are not limited to:

| • | general risks associated with the ownership and operation of real estate, including changes in demand, risks related to development of self storage properties, potential liability for environmental contamination, natural disasters and adverse changes in tax, real estate and zoning laws and regulations;

| • | risks associated with downturns in the national and local economies in the markets in which we operate, including risks related to current economic conditions and the economic health of our customers;

| • | the impact of competition from new and existing self storage and commercial properties and other storage alternatives;

| • | difficulties in our ability to successfully evaluate, finance, integrate into our existing operations, and manage acquired and developed properties;

| • | risks related to our development of new properties and/or participation in joint ventures;

| • | risks of ongoing litigation and other legal and regulatory actions, which may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business;

| • | the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing the environment, taxes and our tenant reinsurance business and real estate investment trusts (“REITs”), and risks related to the impact of new laws and regulations;

| • | risk of increased tax expense associated either with a possible failure by us to qualify as a REIT, or with challenges to intercompany transactions with our taxable REIT subsidiaries;

| • | changes in federal or state tax laws related to the taxation of REITs, which could impact our status as a REIT;

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| • | increases in taxes, fees and assessments from state and local jurisdictions;

| • | security breaches or a failure of our networks, systems or technology;

| • | our ability to obtain and maintain financing arrangements on favorable terms;

| • | market trends in our industry, interest rates, the debt and lending markets or the general economy;

| • | the timing of acquisitions and our ability to execute on our acquisition pipeline;

| • | general volatility of the securities markets in which we participate;

| • | changes in the value of our assets;

| • | changes in interest rates and the degree to which our hedging strategies may or may not protect us from interest rate volatility;

| • | our ability to continue to qualify and maintain our qualification as a REIT for U.S. federal income tax purposes;

| • | availability of qualified personnel;

| • | difficulties in raising capital at a reasonable cost;

| • | fiscal policies or inaction at the U.S. federal government level, which may lead to federal government shutdowns or negative impacts on the U.S economy;

| • | estimates relating to our ability to make distributions to our stockholders in the future; and

| • | economic uncertainty due to the impact of terrorism, infectious or contagious diseases or pandemics, or war.

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PART I

Item 1. | Business.

General

Global Self Storage, Inc. (the “Company”) is a self-administered and self-managed real estate investment trust (“REIT”) that owns, operates, manages, acquires, develops and redevelops self storage properties (“stores” or “properties”) in the United States. Our stores are designed to offer affordable, easily accessible, and secure storage space for residential and commercial customers. As of December 31, 2019, the Company owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma. The Company was formerly registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as a non-diversified, closed end management investment company. The Securities and Exchange Commission’s (“SEC”) order approving the Company’s application to deregister from the 1940 Act was granted on January 19, 2016. On January 19, 2016, the Company changed its name to Global Self Storage, Inc. from Self Storage Group, Inc., changed its SEC registration from an investment company to an operating company reporting under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and listed its common stock on NASDAQ under the symbol “SELF”.

The Company was incorporated on December 12, 1996 under the laws of the state of Maryland. The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). To the extent the Company continues to qualify as a REIT, it will not generally be subject to U.S. federal income tax, with certain limited exceptions, on its taxable income that is distributed to its stockholders.

Business Activities

As of December 31, 2019, the Company had 33 total employees and owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores. As of December 31, 2019, these properties totaled 953,850 net leasable square feet and offered 6,684‬ storage units. In addition to traditional and climate-controlled units, many of the properties feature both covered and outside auto/RV/boat storage. The Company invests in stores by acquiring stores through its wholly owned subsidiaries and operates primarily in one segment: rental operations. ‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

We continue to evaluate and enact a range of new initiatives and opportunities in order to help enable us to maximize our stores’ financial performance and stockholder value. Our strategies in seeking to maximize our stores’ financial performance and stockholder value include, among others, the following:

| • | continue to implement and refine our move-in rate management systems in seeking to maximize occupancies and thus revenue derived from our store portfolio;

| • | continue to implement and refine our existing tenant revenue rate management systems in seeking to maximize revenue per leased square foot from our store portfolio;

| • | continue to implement and refine our digital, drive-by, and referral marketing programs in seeking to attract more and higher quality (e.g., credit card paying) customers to our stores at a lower net cost; and

| • | continue to pursue the acquisition of single stores and small portfolios that we believe can add stockholder value.

Our stores are generally located in densely populated and high traffic areas near major roads and highways. All of our stores display prominent road signage and most feature LED marquee boards describing the store features and move-in rent specials. Our stores are generally located in areas with strict zoning laws and attentive planning boards which make it difficult for our competition to develop new properties near ours. As we evaluate potential stores for acquisition, we seek stores in areas with these high barriers to entry.

Most of our stores compete with other well-managed and well-located competitors and we are subject to general economic conditions, particularly those that affect the spending habits of consumers and moving trends. Because we operate in competitive markets, often where self storage consumers have multiple stores from which to

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choose, such competition has affected and is likely to continue to affect our store results. We experience seasonal fluctuations in occupancy levels as well, with occupancy levels generally higher in the summer months due to increased moving activity. We believe that our centralized information networks, national telephone and online reservation system, the brand name “Global Self Storage,” and our economies of scale help enable us to meet such challenges effectively.

In seeking to maximize the performance of our stores, we employ our proprietary revenue rate management systems which help us to analyze, adjust, and set our move-in and existing tenant rental rates on a real-time basis across our portfolio. Among other technologies, we employ internet data scraping of our local competitors’ move-in rental rates to help enable us to proactively respond and take advantage of changing market conditions across our store portfolio. Our operating results typically depend significantly on our ability to manage our storage units’ rental rates, to respond in a timely manner to prospective tenant inquiries, and to lease available storage units, and on the ability of our tenants to make required storage unit rental payments.

We have registered the trademark and developed the brand “Global Self Storage.” We have developed a corporate logo and have incorporated it on all of our on-site signage, advertising and other marketing materials. This branding process has included the creation and development of the www.GlobalSelfStorage.us website, whereby prospective customers can rent a storage unit or learn about the features of any of our self storage properties. We continue to develop the Global Self Storage internet presence through advertising and search engine optimization. We solicit tenant reviews for posting to the “Testimonials” section of our website and encourage others to view these reviews. We have found referrals of current tenants to be a reliable source of new tenants. Existing self storage customers may also pay their storage unit rent online through www.GlobalSelfStorage.us.

Attracting high quality, long-term tenants is a top priority for the Company and we strongly believe in tenant quality over tenant quantity. In our marketing efforts, we have seen success in our referral marketing program, through which our tenants may recommend Global Self Storage to their family, friends, and colleagues. We also believe our store managers’ attention to detail – maintaining security, cleanliness, and attentive customer service – is essential to attracting high quality tenants.

Tenant leases at all of our stores are “month-to-month” leases. We seek to deliver at least 30 days’ written notice of any rental rate change. Lease rates at each store may be set monthly, semi-annually, annually, or at any other time on a case-by-case basis as determined in the discretion of management. Tenants may be assessed late, administrative, and/or other fees. To date, none of the Company’s stores have experienced any material delinquencies.

Each of our stores features a rental and payment center kiosk available 24 hours a day, seven days a week, where prospective tenants can rent a unit and current tenants can pay their rent. All of our stores have on-site property managers who are committed to delivering the finest customer service. We utilize a customer call center to handle telephone inquiries from current and prospective tenants whenever our store managers are not available. They can respond to questions about our properties and storage features, and book reservations. We seek to deliver convenience and high quality customer service to our tenants, as well as maintain clean and secure stores at all times.

Please refer to Item 7 herein for further discussion of, among other things, competitive business conditions, the Company’s competitive position in the self storage industry, methods of competition, and the effect of existing or probable government regulations on the Company’s business.

Our Acquisition Strategy

General

In our store acquisition strategy, we will seek to continue to focus on secondary and tertiary cities in the Mid-West, Northeast and Mid-Atlantic parts of the country where we believe there is relatively less self storage space per capita available, generally resulting in greater demand for available self storage square feet; where new self storage development and permitting through the local planning and zoning boards is typically more difficult to

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secure t hus creating barriers to entry for new self storage competition; and where local new supply through new development is generally less prevalent.

We continue to review available acquisition opportunities with the awareness that, should interest rates decrease, resulting store capitalization rates may also decrease and store prices may begin to increase. We will seek to continue to employ our strict acquisition underwriting standards and remain a disciplined buyer and only execute acquisitions where we believe that our management techniques and innovations can strengthen our portfolio and increase stockholder value. For future acquisitions, the Company may continue to use various financing and capital raising alternatives including, but not limited to, debt and/or equity offerings (such as our recent rights offering that closed in the fourth quarter of 2019), credit facilities, mortgage financing, and joint ventures with third parties.

We continue to actively review a number of store and store portfolio acquisition opportunities and have been working to further develop and expand our current stores.

Recent Acquisitions

On November 19, 2019, we completed the acquisition of Erie Station Storage, a self storage property located in West Henrietta, NY, for $6.2 million dollars (the “West Henrietta Property”). The West Henrietta Property is located in the growing upstate suburban community of West Henrietta, New York, is near the Rochester Institute of Technology, and is approximately 11 miles from an existing Global Self Storage property in Gates, New York (a western suburb of Rochester). As of December 31, 2019, the West Henrietta Property featured seven buildings with a total of 452 storage units and 48,250 net leasable square feet. Storage options include both drive up access and climate-controlled units. The West Henrietta Property also has immediate expansion potential with an approved permit to commence construction of a 7,300 net leasable square feet self storage building.

Our Financing Strategy

Our financing strategy is to minimize the cost of our capital in order to maximize the returns generated for our stockholders.

On June 24, 2016, certain of our wholly owned subsidiaries (“Term Loan Secured Subsidiaries”) entered into a loan agreement and certain other related agreements (collectively, the “Term Loan Agreement”) between the Term Loan Secured Subsidiaries and Insurance Strategy Funding IV, LLC (the “Term Loan Lender”). Under the Term Loan Agreement, the Term Loan Secured Subsidiaries borrowed from Term Loan Lender the principal amount of $20 million pursuant to a promissory note (the “Term Loan Promissory Note”). The Term Loan Promissory Note bears interest at a rate equal to 4.192% per annum and is due to mature on July 1, 2036. Pursuant to a security agreement (the “Term Loan Security Agreement”), the obligations under the Term Loan Agreement are secured by certain real estate assets owned by the Term Loan Secured Subsidiaries. J.P. Morgan Investment Management, Inc. acted as Special Purpose Vehicle Agent of the Term Loan Lender. We entered into a non-recourse guaranty (the “Term Loan Guaranty” and together with the Term Loan Agreement, the Term Loan Promissory Note and the Term Loan Security Agreement, the “Term Loan Documents”) on June 24, 2016 to guarantee the payment to the Term Loan Lender of certain obligations of the Term Loan Secured Subsidiaries under the Term Loan Agreement. We have used some of the proceeds from the Term Loan Agreement to acquire four additional self storage properties.

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On December 20, 2018, certain of our wholly owned subsidiaries (“Credit Facility Secured Subsidiaries”) entered into a revolving credit loan agreement (collectively, the “Credit Facility Loan Agreement”) between the Credit Facility Secu red Subsidiaries and TCF National Bank (“Credit Facility Lender”). Under the Credit Facility Loan Agreement, the Credit Facility Secured Subsidiaries may borrow from the Credit Facility Lender in the principal amount of up to $10 million pursuant to a prom issory note (the “Credit Facility Promissory Note”). The Credit Facility Promissory Note bears an interest rate equal to 3.00% over the One Month U.S. Dollar London Inter-Bank Offered Rate and is due to mature on December 20, 2021. The obligations under th e Credit Facility Loan Agreement are secured by certain real estate assets owned by the Credit Facility Secured Subsidiaries. We entered into a guaranty of payment on December 20, 2018 (the “Credit Facility Guaranty,” and together with the Credit Facility Loan Agreement, the Credit Facility Promissory Note and related instruments, the “Credit Facility Loan Documents”) to guarantee the payment to the Credit Facility Lender of certain obligations of the Credit Facility Secured Subsidiaries under the Credit Fa cility Loan Agreement. As of December 31, 2019, we have withdrawn proceeds of $4,914,000 under the Credit Facility Loan Agreement. We currently intend to strategically withdraw proceeds available under the Credit Facility Loan Agreement to fund: (i) the ac quisition of additional self storage properties, (ii) expansions at existing self storage properties in our portfolio, and/or (iii) joint ventures with third parties for the acquisition and expansion of self storage properties.

On December 18, 2019, we completed our previously announced rights offering (the “rights offering”), which expired on December 13, 2019. At the closing of the rights offering, the Company sold and issued an aggregate of 1,601,291 shares of the Company’s common stock (“common stock”) at the subscription price of $4.18 per whole share of common stock, pursuant to the exercise of subscriptions and oversubscriptions from the Company’s stockholders. The Company raised aggregate gross proceeds of approximately $6.7 million in the rights offering.

Our Third-Party Management Platform

On October 23, 2019, we signed our first self storage client under our third-party management platform. As of December 31, 2019, the property, which was rebranded as “Global Self Storage,” had 136,718-leasable square feet and was comprised of 617 climate-controlled and non-climate-controlled units located in Edmond, Oklahoma.

We believe that our third-party management platform will provide an additional revenue stream through management fees and tenant insurance premiums and will help expand our brand awareness, and may also allow us to build a captive acquisition pipeline. We are actively marketing our third-party management platform to developers, single-property self storage operators, and small-portfolio self storage operators, and we believe these discussions may lead to the addition of new properties to our owned and/or third-party management portfolios. In addition, we may pursue third-party management opportunities owned by certain affiliates or joint venture partners for a fee, and utilize such relationships with third-party owners as a source for future acquisitions and investment opportunities.

Regulation

General

Generally, self storage properties are subject to various laws, ordinances and regulations, including those relating to lien sale rights and procedures, public accommodations, insurance, and the environment. Changes in any of these laws, ordinances or regulations could increase the potential liability existing or created by tenants or others on our properties. Laws, ordinances, or regulations affecting development, construction, operation, upkeep, safety and taxation requirements may result in significant unanticipated expenditures, loss of self storage sites or other impairments to operations, which would adversely affect our cash flows from operating activities.

Under the Americans with Disabilities Act of 1990 (the “ADA”), all places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. For additional information on the ADA, see “Item 1A. Risk Factors—Risks Related to Our Business—Costs associated with complying with the ADA may result in unanticipated expenses.”

Insurance activities are subject to state insurance laws and regulations as determined by the particular insurance commissioner for each state in accordance with the McCarran-Ferguson Act, as well as subject to the

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Gramm-Leach-Bliley Act and the privacy regulations promulgated by the Federal Trade Commission pursuant theret o.

Under the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (“CERCLA”), and comparable state laws, we may be required to investigate and remediate regulated hazardous materials at one or more of our properties. For additional information on environmental matters and regulation, see “Item 1A. Risk Factors—Risks Related to Our Business—Extensive environmental regulation to which we are subject creates uncertainty regarding future environmental expenditures and liabilities.”

Property management activities are often subject to state real estate brokerage laws and regulations as determined by the particular real estate commission for each state.

REIT Qualification

We have elected and we believe that we have qualified to be taxed as a REIT under the Code, commencing with our taxable year ended on December 31, 2013. We generally will not be subject to U.S. federal income tax on our net taxable income to the extent that we distribute annually all of our net taxable income to our stockholders and maintain our qualification as a REIT. We believe that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and we expect that our intended manner of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT. To qualify, and maintain our qualification, as a REIT, we must meet on a continuing basis, through our organization and actual investment and operating results, various requirements under the Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our shares. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate rates and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we failed to qualify as a REIT. Even if we qualify for taxation as a REIT, we still may be subject to some U.S. federal, state and local taxes on our income or assets. In addition, subject to maintaining our qualification as a REIT, a portion of our business is conducted through, and a portion of our income is earned by, one or more taxable REIT subsidiaries (“TRSs”), which are subject to U.S. federal corporate income tax at regular rates. Distributions paid by us generally will not be eligible for taxation at the preferential U.S. federal income tax rates that currently apply to certain distributions received by individuals from taxable corporations, unless such distributions are attributable to dividends received by us from a TRS.

U.S. Federal Income Tax Legislation

On December 22, 2017, Congress enacted H.R. 1, also known as the Tax Cuts and Jobs Act of 2017 (“TCJA”). The TCJA made major changes to the Internal Revenue Code, including the reduction of the tax rates applicable to individuals and subchapter C corporations, a reduction or elimination of certain deductions (including new limitations on the deductibility of interest expense), permitting immediate expensing of capital expenditures and significant changes in the taxation of earnings from non-U.S. sources. While the IRS has issued guidance pertaining to certain aspects of the TCJA, other aspects of the TCJA remain unclear, and additional administrative guidance is still required in order to fully evaluate the effect of many provisions. While we do not currently expect this reform to have a significant impact to the Company’s consolidated financial statements, stockholders are urged to consult with their tax advisors regarding the effects of the TCJA or other legislative, regulatory or administrative developments on an investment in the Company’s common stock.

Competition

We compete with many other entities engaged in real estate investment activities for customers and acquisitions of self storage properties and other assets, including national, regional, and local owners, operators, and developers of self storage properties. We compete based on a number of factors including location, rental rates, security, suitability of the property’s design to prospective tenants’ needs, and the manner in which the property is operated and marketed. We believe that the primary competition for potential customers comes from other self storage properties within a three to five mile radius from our stores. We have positioned our properties within their respective markets as high-quality operations that emphasize tenant convenience, security, and professionalism.

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We also may compete with numerous other potential buyers when pursuing a possible property for acquisition, which can increase the potential cost of a project. These competing bidders also may possess greater resources than us and the refore be in a better position to acquire a property.

Our primary national competitors in many of our markets for both tenants and acquisition opportunities include local and regional operators, institutional investors, private equity funds, as well as the other public self storage REITs. These entities also seek financing through similar channels to the Company. Therefore, we will continue to compete for institutional investors in a market where funds for real estate investment may decrease.

Available Information

The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Additional information about the Company, not contained in this annual report or made a part hereof, may be found at www.GlobalSelfStorage.us. The information on our website is not intended to form a part of or be incorporated by reference into this annual report.

Item 1A. | Risk Factors.

Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the following risk factors, together with the other information contained in this annual report. Any of these risks described could materially adversely affect our business, financial condition, liquidity, results of operations, tax status or ability to make distributions to our stockholders. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business operations. If this were to happen, the price of our securities could decline significantly, and you could lose a part or all of your investment.

Risks Related to our Self Storage Properties and our Business

Adverse economic or other conditions in the markets in which we do business and more broadly could negatively affect our occupancy levels and rental rates and therefore our operating results.

Our operating results are dependent upon our ability to achieve optimal occupancy levels and rental rates at our self storage properties. Adverse economic or other conditions, such as during a government shutdown, in the markets in which we do business, may lower our occupancy levels and limit our ability to maintain or increase rents or require us to offer rental discounts. No single customer represents a significant concentration of our revenues. The following adverse developments, among others, in the markets in which we do business may adversely affect the operating performance of our properties:

| • | perceptions by prospective tenants of our self storage properties of the safety, convenience, and attractiveness of such properties and the areas in which they are located;

| • | industry slowdowns, relocation of businesses and changing demographics may adversely impact the markets in which we invest and in which our self storage properties operate;

| • | periods of economic slowdown or recession, rising interest rates, or declining demand for self storage or the public perception that any of these events may occur could result in a general decline in rental rates or new rentals or an increase in tenant defaults; and

| • | actual or perceived oversupply or declining demand for self storage in a particular area.

The outbreak of highly infectious or contagious diseases, including the current outbreak of the novel coronavirus (“COVID-19”), could materially and adversely impact our business, financial condition, results of operations and cash flows. Further, the spread of COVID-19 outbreak has caused severe disruptions in the U.S. and global economy and financial markets and could potentially create widespread business continuity issues of an as yet unknown magnitude and duration.

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In December 2019, COVID-19 was reported to have surfaced in Wuhan, China. COVID-19 has since spread to over 100 countries, including every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on Mar ch 13, 2020 the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. Many experts predict that the outbreak will trigger a period of global economic slowdown or a global recession.

Outbreaks of pandemic or contagious diseases, such as the current outbreak of COVID-19, could materially and adversely affect our business, financial condition, results of operations and cash flows due to, among other factors, (i) a general decline in business activity and demand for self storage would adversely affect our ability or desire to grow our portfolio; (ii) potential negative impact on the health of our personnel, particularly if a significant number of them are impacted; (iii) difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants’ ability to meet their obligations to us; and (iv) a deterioration in our ability to operate in affected areas or delays in the supply of products or services to us from vendors that are needed for our efficient operations. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty and risk with respect to our business, financial condition, results of operations and cash flows.

Our storage leases are relatively short-term in nature, which exposes us to the risk that we may have to re-lease our units and we may be unable to do so on attractive terms, on a timely basis or at all.

If we are unable to promptly re-let our units or if the rates upon such re-letting are significantly lower than expected, then our business and results of operations would be adversely affected. Any delay in re-letting units as vacancies arise would reduce our revenues and harm our operating results. In addition, lower than expected rental rates upon re-letting could adversely affect our revenues and impede our growth.

Increases in taxes and regulatory compliance costs may reduce our income and adversely impact our cash flows.

Increases in income or other taxes generally are not passed through to tenants under leases and may reduce our net income, funds from operations (“FFO”), cash flows, financial condition, ability to pay or refinance our debt obligations, ability to make cash distributions to stockholders, and the trading price of our securities. Similarly, changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures, which could result in similar adverse effects.

Our property taxes could increase due to various reasons, including a reassessment, which could adversely impact our operating results and cash flow.

The value of our properties may be reassessed for property tax purposes by taxing authorities including as a result of the acquisition of new self storage properties. Accordingly, the amount of property taxes we pay in the future may increase substantially from what we have paid in the past. Increases in property or other taxes generally are not passed through to tenants under leases and may reduce our results of operations and cash flow, and could adversely affect our ability to pay any expected dividends to our stockholders.

Increases in operating costs may adversely affect our results of operation and cash flow.

Increases in operating costs, including insurance costs, labor costs, utilities, capital improvements, real estate assessments and other taxes and costs of compliance with REIT requirements and with other laws, regulations and governmental policies could adversely affect our results of operation and cash flow.

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We depend upon our on-site personnel to maximize tenant satisfaction at each of our properties, and any difficulties we encounter in hiring, training, and maintaining skilled field personnel may harm our operating performance.

We depend upon our on-site personnel to maximize tenant satisfaction at each of our properties, and any difficulties we encounter in hiring, training and maintaining skilled field personnel may harm our operating performance. The general professionalism of a site’s managers and staff are contributing factors to a site’s ability to successfully secure rentals and retain tenants. If we are unable to successfully recruit, train and retain qualified field personnel, our quality of service could be adversely affected, which could lead to decreased occupancy levels and reduced operating performance.

We face competition from other self storage properties, which may adversely impact the markets in which we invest and in which our self storage properties operate.

Increased competition in the self storage business has led to both pricing and discount pressures. This increased competition could limit our ability to increase revenues in the markets in which we operate. While some markets may be able to absorb an increase in self storage properties due to superior demographics and density, other markets may not be able to absorb additional properties and may not perform as well.

Rental revenues are significantly influenced by demand for self storage space generally, and a decrease in such demand would likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio or if we owned a larger number of self storage properties.

Because our portfolio of properties consists of only self storage properties, we are subject to risks inherent in investments in a single industry. A decrease in the demand for self storage space would have a greater adverse effect on our rental revenues than it would if we owned a more diversified real estate portfolio. Demand for self storage space has been and could be adversely affected by ongoing weakness in the national, regional and local economies, changes in supply of, or demand for, similar or competing self storage properties in an area and the excess amount of self storage space in a particular market. To the extent that any of these conditions occur, they are likely to affect market rents for self storage space, which could cause a decrease in our rental revenue. Any such decrease could impair our operating results, ability to satisfy debt service obligations and ability to make cash distributions to our stockholders.

Further, currently we invest in a limited number of self storage properties. As a result, the potential effect on our financial condition, results of operations, and cash available for distribution to stockholders, resulting from poor performance at one or more of our self storage properties could be more pronounced than if we invested in a larger number of self storage properties.

We may not be successful in identifying and consummating suitable acquisitions, or integrating and operating acquired properties, which may adversely impact our growth.

We expect to make future acquisitions of self storage properties. We may not be successful in identifying and consummating suitable acquisitions that meet our criteria, which may impede our growth. We may encounter competition when we seek to acquire properties, especially for brokered portfolios. Aggressive bidding practices by prospective acquirers have been commonplace and this competition also may be a challenge for our growth strategy and potentially result in our paying higher prices for acquisitions including paying consideration for certain properties that may exceed the value of such properties. Should we pay higher prices for self storage properties or other assets, our potential profitability may be reduced. Also, when we acquire any self storage properties, we will be required to integrate them into our then existing portfolio. The acquired properties may turn out to be less compatible with our growth strategy than originally anticipated, may cause disruptions in our operations or may divert management’s attention away from day-to-day operations, which could impair our results of operations. Our ability to acquire or integrate properties may also be constrained by the following additional risks:

| • | the inability to achieve satisfactory completion of due diligence investigations and other customary closing conditions;

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| • | spending more than the time and amounts budgeted to make necessary improvements or renovations to acquired properties;

| • | the inability to build a captive pipeline of target properties that meet our rigorous underwriting standards;

| • | the inability to accurately estimate occupancy levels, rental rates, operating costs or costs of improvements to bring an acquired property up to the standards established for our intended market position; and

| • | encountering delays in the selection, acquisition, development or redevelopment of self storage properties which could adversely affect returns to stockholders and stockholders could suffer delays in the distribution of cash dividends attributable to any such properties.

We may not be able to develop a captive pipeline of acquisition targets without the use of non-refundable deposits.

We may be required to use non-refundable deposits to develop a captive pipeline of acquisition targets. If we are unable to raise the capital necessary to consummate such acquisitions we may be forced to abandon all or some of the acquisitions and forfeit any non-refundable deposits. If this occurs, it could adversely impact our operating results and our ability to pay any expected dividends to our stockholders.

We may acquire properties subject to liabilities which may adversely impact our operating results.

We may acquire properties subject to liabilities without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, claims by persons dealing with the former owners of the properties and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties. The costs associated with these liabilities may adversely impact our operating results.

Our investments in development and redevelopment projects may not yield anticipated returns which could adversely impact our economic performance.

In deciding whether to develop or redevelop a particular property, we make certain assumptions regarding the expected future performance of that property. These assumptions are inherently uncertain, and, if they prove to be wrong, then we may be subject to certain risks including the following:

| • | we may not complete development projects on schedule or within projected budgeted amounts;

| • | we may underestimate the costs necessary to bring a property up to the standards established for its intended market position;

| • | we may encounter delays or refusals in obtaining all necessary zoning, land use, building, occupancy and other required governmental permits and authorizations;

| • | we may be unable to increase occupancy at a newly acquired property as quickly as expected or at all; and

| • | we may be unable to obtain financing for these projects on favorable terms or at all.

The occurrence of such events could adversely affect the investment returns from these development or redevelopment projects and may adversely impact our economic performance.

Store ownership through joint ventures may limit our ability to act exclusively in our interest.

We may co-invest with third parties through joint ventures. In any such joint venture, we may not be in a position to exercise sole decision-making authority regarding the stores owned through joint ventures. Investments in joint ventures may, under certain circumstances, involve risks not present when a third party is not involved, including the possibility that joint venture partners might become bankrupt or fail to fund their share of required capital contributions. Joint venture partners may have business interests or goals that are inconsistent with our

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business interests or goals and may be in a position to take actions contrary to our policies or objectives. Such investments also have the potential risk of impasse on strategic decisions, such as a sal e, in cases where neither we nor the joint venture partner would have full control over the joint venture. In other circumstances, joint venture partners may have the ability without our agreement to make certain major decisions, including decisions about sales, capital expenditures, and/or financing. Any disputes that may arise between us and our joint venture partners could result in litigation or arbitration that could increase our expenses and distract our officers and/or directors from focusing their t ime and effort on our business. In addition, we might in certain circumstances be liable for the actions of our joint venture partners, and the activities of a joint venture could adversely affect our ability to qualify as a REIT, even though we do not con trol the joint venture.

Our performance is subject to risks associated with the real estate industry.

An investment in us is closely linked to the performance of the real estate markets in which we own self storage properties and subject to the risks associated with the direct ownership of real estate, including fluctuations in interest rates, inflation or deflation; declines in the value of real estate; and competition from other real estate investors with significant capital. Prevailing economic conditions affecting the real estate industry may adversely affect our business, financial condition and results of operations.

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties.

We may be unable to promptly sell one or more properties in response to changing economic, financial and investment conditions. We cannot predict whether we will be able to sell any property for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot give assurances that we will have funds available to correct those defects or to make those improvements. In acquiring a property, we may agree to transfer restrictions that materially restrict us from selling that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that property. These transfer restrictions may impede our ability to sell a property even if we deem it necessary or appropriate. We may also have joint venture investments in certain of our properties and, consequently, our ability to control decisions relating to such properties may be limited.

Any negative perceptions of the self storage industry generally may result in a decline in our stock price.

To the extent that the investing public has a negative perception of the self storage industry, the value of our securities may be negatively impacted.

Costs associated with complying with the ADA may result in unanticipated expenses.

Our self storage properties also are subject to risks related to changes in, and changes in enforcement of, federal, state and local laws, regulations and governmental policies, including fire and safety requirements, health, zoning and tax laws, governmental fiscal policies and the ADA. Local regulations, including municipal or local ordinances, zoning restrictions and restrictive covenants imposed by community developers may restrict our use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to acquiring a property or when undertaking renovations of any of our existing properties. Further, compliance with the ADA and other regulations may require us to make unanticipated expenditures that could significantly reduce cash available for distribution to stockholders. A failure to comply with the ADA or similar state laws could lead to government imposed fines on us and/or litigation, which could also involve an award of damages to individuals affected by the noncompliance. Such noncompliance also could result in an order to correct any noncomplying feature, which could result in substantial capital expenditures.

Extensive environmental regulation to which we are subject creates uncertainty regarding future environmental expenditures and liabilities.

Under environmental regulations such as CERCLA, owners and operators of real estate may be liable for the costs of investigating and remediating certain hazardous substances or other regulated materials on or in such

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property. Such laws often impose liability, without regard to knowledge or fault, for removal or remediation of hazardous substances or other regulated materials upon owners and operators of contaminated property, even after they no longer own or operate the prope rty. Moreover, the past or present owner or operator of a property from which a release emanates could be liable for any personal injuries or property damages that may result from such releases, as well as any damages to natural resources that may arise fr om such releases. The presence of such substances or materials, or the failure to properly remediate such substances, may adversely affect the owner’s or operator’s ability to lease, sell or rent such property or to borrow using such property as collateral.

We may become subject to litigation or threatened litigation or other claims that may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business.

We may become subject to disputes with commercial parties with whom we maintain relationships or other parties with whom we do business. Any such dispute could result in litigation between us and the other parties. Whether or not any dispute actually proceeds to litigation, we may be required to devote significant management time and attention to its successful resolution (through litigation, settlement or otherwise), which would detract from our management’s ability to focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be significant. In addition, any such resolution could involve our agreement with terms that restrict the operation of our business.

From time to time we may be required to resolve tenant claims and litigation and employment-related claims and litigation by corporate level and field personnel which could result in substantial liabilities to us. We also could be sued for personal injuries and/or property damage occurring at our properties. The liability insurance we maintain may not cover all costs and expenses arising from such lawsuits.

Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition and cash flow.

We maintain comprehensive liability, fire, flood, earthquake, wind, extended coverage and rental loss insurance (as deemed necessary or as required by our lenders, if any) with respect to our properties. Certain types of losses, however, may be either uninsurable or not economically insurable, such as losses due to earthquakes, hurricanes, tornadoes, riots, acts of war or terrorism. Should an uninsured loss occur, we could lose both our investment in and anticipated profits and cash flow from a property. In addition, if any such loss is insured, we may be required to pay significant amounts on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss.

To the extent we invest in publicly traded REITs, our performance may be subject to the risks of investment in such securities.

The value of our investments in REITs may fluctuate, sometimes rapidly and unpredictably. Because REITs concentrate their assets in the real estate industry, the performance of REITs is closely linked to the performance of the real estate markets. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments, rising interest rates, and rising capitalization rates. REIT prices also may drop because of the failure of borrowers to pay their loans and poor management. In addition, there are specific risks associated with particular sectors of real estate investments such as self storage, retail, office, hotel, healthcare, and multi-family properties. Many REITs utilize leverage, which increases investment risk and could adversely affect a REIT’s operations and market value in periods of rising interest rates as well as risks normally associated with debt financing. In addition, a REIT’s failure to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), or failure to maintain exemption from registration under the Investment Company Act could adversely affect our operations and our qualification as a REIT under the Code. The failure of these investments to perform as expected may have a significant effect on our performance and our ability to make distributions to stockholders.

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We may be unable to make distributions in the future, maintain our curre nt level of distributions or increase distributions over time.

There are many factors that can affect the availability and timing of cash distributions to stockholders and the determination to make distributions will fall within the discretion of our board of directors. Our board of directors’ decisions to pay distributions will depend on many factors, such as our historical and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, capital expenditure and other expense obligations, debt covenants, contractual prohibitions or other limitations and applicable law and such other matters as our board of directors may deem relevant from time to time. Actual cash available for distributions may vary substantially from estimates. We may not have sufficient available cash from operations to make a distribution required to qualify for or maintain our REIT status. We may be required to borrow or make distributions that would constitute a return of capital which may reduce the amount of capital we invest in self storage properties. We cannot assure stockholders that we will be able to make distributions in the future, be able to maintain our current level of distributions or that our distributions will increase over time, and our inability to make distributions, or to make distributions at expected levels, could result in a decrease in the market price of our common stock.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or security breach through cyber-attacks, cyber-intrusions, or other methods could disrupt our information technology networks and related systems and harm our business.

We rely on information technology networks and systems, including the internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including, but not limited to, financial transactions and records, personally identifiable information, and tenant and lease data. In many cases, we rely significantly on third-party vendors to retain data, process transactions, and provide information technology and other system services. Our networks and operations could be disrupted, and sensitive data could be compromised, by physical or electronic security breaches, targeted against us, our vendors or other organizations, including financial markets or institutions, including by way of or through cyber-attacks or cyber-intrusions over the internet, malware, computer viruses, attachments to e-mails, phishing, employee theft or misuse, or inadequate security controls. We rely on third-party vendors and commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential tenant and other sensitive information. Although we make efforts to protect the security and integrity of our networks and systems, there can be no assurance that these efforts and measures will be effective or that attempted security breaches or disruptions would not be successful, as such attacks and breaches may be difficult to detect (or not detected at all) and are becoming more sophisticated. In such event, we may experience business interruptions or shutdowns; data loss, ransom, misappropriation, or corruption; theft or misuse of confidential or proprietary information; or litigation and investigation by tenants, governmental or regulatory agencies, or other third parties. Such events could also have other adverse impacts on us, including, but not limited to, regulatory penalties, breaches of debt covenants or other contractual or REIT compliance obligations, late or misstated financial reports, and significant diversion of management attention and resources. As a result, such events could have a material adverse effect on our financial condition, results of operations and cash flows and harm our business reputation.

Privacy concerns could result in regulatory changes that may harm our business.

Personal privacy has become a significant issue in the jurisdictions in which we operate. Many jurisdictions in which we operate have imposed restrictions and requirements on the use of personal information by those collecting such information. Changes to law or regulations affecting privacy, if applicable to our business, could impose additional costs and liability on us and could limit our use and disclosure of such information.

Risks Related to Our Organization and Structure

Management has limited prior experience operating a REIT and complying with the income, asset and other limitations imposed by the REIT provisions of the Code.

Management has limited prior experience operating a REIT. The REIT provisions of the Code are complex and the failure to comply with those provisions could cause us to fail to qualify as a REIT or could force us to pay unexpected taxes and penalties. Managing a portfolio of self storage properties under such constraints may hinder

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our ability to achieve our objectives. We have elected to q ualify as a REIT under the Code, commencing with our taxable year ended December 31, 2013, and intend to continue to qualify as a REIT in subsequent years.

The ability of our board of directors to revoke our REIT election without stockholder approval may cause adverse consequences to our stockholders.

Our board of directors may revoke or otherwise terminate our REIT election without the approval of stockholders if it determines that it is no longer in our best interests to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our net taxable income to stockholders, which may have adverse consequences on the total return to our stockholders.

Our business could be harmed if key personnel with business experience in the self storage industry terminate their employment with us.

Our officers have experience in the self storage industry and our success will depend, to a significant extent, on their services. There is no guarantee that any of them will remain employed with us. We do not generally maintain key person life insurance. The loss of services of one or more members of our senior management could harm our business.

Our management has limited experience operating a public company and therefore may have difficulty in successfully and profitably operating our business, or complying with regulatory requirements.

Our management has had limited experience operating a public company. As a result, we cannot assure you that we will be able to successfully execute our business strategies as a public company or comply with regulatory requirements applicable to public companies.

There may be conflicts of interest resulting from the relationships among us, our affiliates, and other related parties.

The outside business interests of our officers may divert their time and attention away from us, and may result in a potential conflict with respect to the allocation of business opportunities, which could harm our business. Our board of directors has adopted policies and procedures designed to mitigate these conflicts of interest, such as allocation procedures for determining the appropriate allocation of such business opportunities. Specifically, if any of our officers or directors who also serves as an officer, director, or advisor of our affiliates becomes aware of a potential transaction related primarily to the self storage business that may represent a corporate opportunity for us and one or more of our affiliates, such officer or director has no duty to present that opportunity to such affiliates and we will have the sole right to pursue the transaction if our board of directors so determines. Notwithstanding the foregoing, our officers or directors are encouraged to notify our affiliates of such an opportunity.

Certain provisions of Maryland law could inhibit changes in control of our company.

Certain “business combination” and “control share acquisition” provisions of the Maryland General Corporation Law (“MGCL”), may have the effect of deterring a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock. Pursuant to the MGCL, our board of directors has by resolution exempted business combinations between us and any other person. Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. However, there can be no assurance that these exemptions will not be amended or eliminated at any time in the future. Our charter and bylaws and Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest.

Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interest.

Our charter limits the liability of our present and former directors and officers to us and our stockholders for money damages to the maximum extent permitted under Maryland law. Under current Maryland law, our present

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and former directors and officers will not have any liability to us or our stockholders for money da mages other than liability resulting from:

| • | actual receipt of an improper benefit or profit in money, property or services; or

| • | active and deliberate dishonesty by the director or officer that was established by a final judgment and is material to the cause of action.

Our charter authorizes us to indemnify our present and former directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. Our bylaws require us to indemnify each present and former director or officer, to the maximum extent permitted by Maryland law, in connection with any proceeding to which he or she is made, or threatened to be made, a party to or witness in by reason of his or her service to us as a director or officer or in certain other capacities. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former directors and officers without requiring a preliminary determination of their ultimate entitlement to indemnification. As a result, we and our stockholders may have more limited rights against our present and former directors and officers than might otherwise exist absent the current provisions in our charter and bylaws or that might exist with other companies, which could limit your recourse in the event of actions not in your best interest.

Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our stockholders to effect changes to our management.

Our charter provides that, subject to the rights of holders of one or more classes or series of preferred shares, a director may be removed with cause, by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors. Vacancies on our board of directors generally may be filled only by a majority of the remaining directors in office, even if less than a quorum. These requirements make it more difficult to change our management by removing and replacing directors and may prevent a change in our control that is in the best interests of our stockholders.

We may change our investment and financing strategies and enter into new lines of business without stockholder consent, which may subject us to different risks.

We may change our investment and financing strategies and enter into new lines of business at any time without the consent of our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this document. A change in our investment strategy or our entry into new lines of business may increase our exposure to other risks or real estate market fluctuations.

If other self storage companies convert to a REIT structure or if tax laws change, we may no longer have an advantage in competing for potential acquisitions.

Because we are structured as a REIT, we are a more attractive acquirer of properties to tax-motivated sellers than our competitors that are not structured as REITs. However, if other self storage companies restructure their holdings to become REITs, this competitive advantage will disappear. In addition, new legislation may be enacted or new interpretations of existing legislation may be issued by the Internal Revenue Service (the “IRS”), or the U.S. Treasury Department that could affect the attractiveness of the REIT structure so that it may no longer assist us in competing for acquisitions.

Our board of directors has the power to issue additional shares of our stock in a manner that may not be in the best interest of our stockholders.

Our charter authorizes our board of directors to issue additional authorized but unissued shares of common stock or preferred stock and to increase the aggregate number of authorized shares or the number of shares of any class or series without stockholder approval. In addition, our board of directors may classify or reclassify any unissued shares of common stock or preferred stock and set the preferences, rights and other terms of the classified or reclassified shares. Our board of directors could issue additional shares of our common stock or establish a series of preferred stock that could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for our securities or otherwise not be in the best interests of our stockholders.

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Restrictions on ownership and transfer of our shares may restrict change of control or business combination opportunities in which our stockholders might receive a premium for their shares.

In order for us to qualify as a REIT for each taxable year after our taxable year ended December 31, 2013, no more than 50% in value of our outstanding shares may be owned, directly or constructively, by five or fewer individuals during the last half of any calendar year, and at least 100 persons must beneficially own our shares during at least 335 days of a taxable year of 12 months, or during a proportionate portion of a shorter taxable year. “Individuals” for this purpose include natural persons, private foundations, some employee benefit plans and trusts, and some charitable trusts. Our charter contains, among other things, such customary provisions related to our current operation as a REIT and such other provisions that are consistent with the corporate governance profile of our public peers, including certain customary ownership limitations that prohibit, among other limitations, any person from beneficially or constructively owning more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding share of our common stock or all classes and series of our capital stock. These ownership limits and the other restrictions on ownership and transfer of our shares in our charter could have the effect of discouraging a takeover or other transaction in which holders of our common stock might receive a premium for their shares over the then prevailing market price or which holders might believe to be otherwise in their best interests.

Risks Related to Our Debt Financings

Disruptions in the financial markets could affect our ability to obtain debt financing on reasonable terms or at all and have other adverse effects.

Uncertainty in the credit markets may negatively impact our ability to access additional debt financing or to refinance existing debt maturities on favorable terms (or at all), which may negatively affect our ability to make acquisitions. A downturn in the credit markets may cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our business plans accordingly. In addition, these factors may make it more difficult for us to sell properties or may adversely affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of debt financing or difficulties in obtaining debt financing.

We depend on external sources of capital that are outside of our control, which could adversely affect our ability to acquire or develop properties, satisfy our debt obligations and/or make distributions to stockholders.

We depend on external sources of capital to acquire properties, to satisfy our debt obligations and to make distributions to our stockholders required to maintain our qualification as a REIT, and these sources of capital may not be available on favorable terms, or at all. Our access to external sources of capital depends on a number of factors, including the market’s perception of our growth potential and our current and potential future earnings and our ability to continue to qualify as a REIT for U.S. federal income tax purposes. If we are unable to obtain external sources of capital, we may not be able to acquire properties when strategic opportunities exist, satisfy our debt obligations or make cash distributions to our stockholders that would permit us to qualify as a REIT or avoid paying U.S. federal income tax on all of our net taxable income.

The terms and covenants relating to our indebtedness could adversely impact our economic performance.

The loan documentation for our credit facility and term loan contain (and any new or amended loan and/or facility we may enter into from time to time will likely contain) customary affirmative and negative covenants, including financial covenants that, among other things, require us to comply with a minimum net worth (as defined in our loan documentation) of at least the outstanding principal balance of the term loan and a minimum liquidity standard of at least 10% of the outstanding principal balance of the term loan (as defined in our loan documentation). In the event that we fail to satisfy our covenants, we would be in default under our loan documentation and may be required to repay such debt with capital from other sources. Under such circumstances, other sources of debt or equity capital may not be available to us, or may be available only on unattractive terms. Moreover, the presence of such covenants could cause us to operate our business with a view toward compliance with such covenants, which might not produce optimal returns for stockholders.

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Risks Related to Our Qualification as a REIT

Our failure to qualify or remain qualified as a REIT would subject us to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of operating cash flow available for distribution to stockholders.

We have elected, and believe that we have been qualified, to be taxed as a REIT commencing with the taxable year ended December 31, 2013. Qualification for treatment as a REIT involves the application of highly technical and extremely complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify for REIT treatment. To qualify as a REIT, we must meet, on an ongoing basis through actual operating results, various tests regarding the nature and diversification of our assets and our income, the ownership of our outstanding shares and the amount of our distributions. Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis. Our ability to satisfy these asset tests depends upon an analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. In addition, we have held and may continue to hold investments in other publicly traded REITs. If any such publicly traded REIT fails to qualify as a REIT with respect to any period during which we hold or have held shares of such REIT, or if our interests in these REITs are otherwise not treated as equity in a REIT for U.S. federal income tax purposes, our ability to satisfy the REIT requirements could be adversely affected. Moreover, new legislation, court decisions or administrative guidance may, in each case possibly with retroactive effect, make it more difficult or impossible for us to qualify as a REIT. Thus, while we believe that we have been organized and operated and intend to operate so that we will continue to qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations and the possibility of future changes in our circumstances, no assurance can be given that we have qualified or will so qualify for any particular year. These considerations also might restrict the types of assets that we can acquire or services that we can provide in the future. We have not requested and do not plan to request a ruling from the IRS regarding our qualification as a REIT.

In order to qualify as a REIT, among other requirements, we must ensure that at least 75% of our gross income for each taxable year, excluding certain amounts, is derived from certain real property-related sources, and at least 95% of our gross income for each taxable year, excluding certain amounts, is derived from certain real property-related sources and passive income such as dividends and interest. For purposes of these rules, income from the rental of real property is generally treated as qualifying income, whereas service income is generally treated as nonqualifying income. Furthermore, for purposes of these rules, services provided to tenants at a property could cause all income from the property to be nonqualifying if the income from such services, or the costs of providing those services, exceed certain thresholds. We have provided and may continue to provide certain services to our tenants, such as access to insurance. We believe that these services have been provided in a manner that does not cause our rental income to fail to be treated as qualifying income for purposes of the REIT gross income tests. However, if the IRS were to successfully challenge our characterization of these services, our qualification as a REIT could be adversely impacted. In addition, where we have provided services that may generate nonqualifying income, we believe the income attributable to these services and the costs of providing these services are sufficiently small so as not to cause us to fail to satisfy the REIT gross income tests. However, there is limited guidance regarding what costs are taken into account for this purpose. If the IRS were to successfully assert that these our income from these services or the costs of providing these services exceeded certain thresholds, we could fail to qualify as a REIT.

If we fail to qualify for treatment as a REIT at any time and do not qualify for certain statutory relief provisions, we would be required to pay U.S. federal income tax on our taxable income, and possibly could be required to borrow money or sell assets to pay that tax, thus substantially reducing the funds available for distribution for each year involved. Unless entitled to relief under specific statutory provisions, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which we lost our qualification. In addition, all distributions to stockholders, including capital gain dividends, would be subject to tax as regular dividends to the extent of our earnings and profits.

Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flow.

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Even though we believe that we currently qualify for U.S. federal income tax purposes as a REIT, we may face tax liabilities that will reduce our cash flow, including taxes on any u ndistributed income, state or local income and property and transfer taxes, including real property transfer taxes. In addition, we could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Code to maintain our qualification as a REIT. Any of these taxes would decrease operating cash flow to our stockholders. In addition, in order to meet the REIT qualification requirements, or to avert the imposition of a 100% tax that applies to certain gains derived by a REIT from dealer property or inventory, we hold some of our assets and provide certain services to our tenants through one or more TRSs, or other subsidiary corporations that will be subje ct to corporate-level income tax at regular corporate rates. Any TRSs or other taxable corporations in which we invest will be subject to U.S. federal, state and local corporate taxes. Furthermore, if we acquire appreciated assets from a corporation that i s or has been a subchapter C corporation in a transaction in which the adjusted tax basis of such assets in the our hands is less than the fair market value of the assets, determined at the time we acquired such assets, and if we subsequently dispose of an y such assets during the 5-year period (or with respect to certain prior years the 10-year period) following the acquisition of the assets from the C corporation, we will be subject to tax at the highest corporate tax rates on any gain from the disposition of such assets to the extent of the excess of the fair market value of the assets on the date that we acquired such assets over the basis of such assets on such date, which are referred to as built-in gains. Payment of these taxes generally could material ly and adversely affect our income, cash flow, results of operations, financial condition, liquidity and prospects, and could adversely affect the value of our common stock and the ability to make distributions to stockholders.

To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions.

In order to maintain our REIT qualification and avoid the payment of income and excise taxes, we may need to borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from, among other things, timing differences between the actual receipt of cash and inclusion of income for U.S. federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments. These sources, however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth potential, current debt levels, the per share trading price of our common stock, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail investment activities and/or to dispose of assets at inopportune times, and could adversely affect our financial condition, results of operations, cash flows and our ability to pay distributions on, and the per share trading price of, our common stock.

Failure to make required distributions would subject us to tax, which would reduce the operating cash flow available for distribution to stockholders.

Failure to make required distributions would subject us to tax, which would reduce the operating cash flow to our stockholders. In order to qualify as a REIT, we must distribute to our stockholders each calendar year at least 90% of our net taxable income (excluding net capital gain). To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our net taxable income (including net capital gain), we would be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will incur a 4% non-deductible excise tax on the amount, if any, by which our distributions in any calendar year are less than a minimum amount specified under U.S. federal income tax laws. Although we intend to distribute our net taxable income to our stockholders in a manner intended to satisfy the REIT 90% distribution requirement and to avoid the 4% non-deductible excise tax, it is possible that we, from time to time, may not have sufficient cash to distribute 100% of our net taxable income. There may be timing differences between our actual receipt of cash and the inclusion of items in our income for U.S. federal income tax purposes. Accordingly, there can be no assurance that we will be able to distribute net taxable income to stockholders in a manner that satisfies the REIT distribution requirements and avoids the 4% non-deductible excise tax.

Complying with the REIT requirements may cause us to forgo and/or liquidate otherwise attractive investments.

To qualify as a REIT for U.S. federal tax purposes, we must continually satisfy various requirements concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders, and the ownership of shares. Among other requirements, to qualify as a REIT, we must satisfy certain annual gross income tests and we must ensure that, at the end of each calendar quarter, at least

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75% of the value of our total assets consists of cash, cash items, U.S. government securities and qualifi ed real estate assets. The remainder of our investment in securities generally cannot include more than 10% of the outstanding voting securities of any one issuer (other than U.S. government securities, securities of corporations that are treated as TRSs a nd qualified real estate assets) or more than 10% of the total value of the outstanding securities of any one issuer (other than government securities, securities of corporations that are treated as TRSs and qualified real estate assets). In addition, in g eneral, no more than 5% of the value of our assets can consist of the securities of any one issuer (other than U.S. government securities, securities of corporations that are treated as TRSs and qualified real estate assets), no more than 20% of the value of our total assets can be represented by securities of one or more TRSs and no more than 25% of the value of our assets can consist of debt instruments issued by publicly offered REITs that are not otherwise secured by real property. If we fail to comply with these asset requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adver se tax consequences.

To meet these tests, we may be required to take or forgo taking actions that we would otherwise consider advantageous. For instance, in order to satisfy the gross income or asset tests applicable to REITs under the Code, we may be required to forgo investments that we otherwise would make. Furthermore, we may be required to liquidate from our portfolio otherwise attractive investments. In addition, we may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. These actions could reduce our income and amounts available for distribution to stockholders. Thus, compliance with the REIT requirements may hinder our investment performance.

We may be subject to a 100% tax on income from “prohibited transactions,” and this tax may limit our ability to sell assets or require us to restructure certain of our activities in order to avoid being subject to the tax.

We are subject to a 100% tax on any income from a prohibited transaction. “Prohibited transactions” generally include sales or other dispositions of property (other than property treated as foreclosure property under the Code) that is held as inventory or primarily for sale to customers in the ordinary course of a trade or business by a REIT, either directly or indirectly through certain pass-through subsidiaries. The characterization of an asset sale as a prohibited transaction depends on the particular facts and circumstances.

The 100% tax will not apply to gains from the sale of inventory that is held through a TRS or other taxable corporation, although such income will be subject to tax in the hands of the corporation at regular corporate income tax rates. We have sold items such as locks, boxes, and packing materials to tenants and third parties directly rather than through a TRS, and as a result could be liable for this tax with respect to these sales. To the extent that we continue to sell such inventory items, other than through a TRS, we may be subject to this 100% tax.

Our TRSs will be subject to U.S. federal income tax and will be required to pay a 100% penalty tax on certain income or deductions if transactions with such TRSs are not conducted on arm’s length terms.

We conduct certain activities (such as selling packing supplies and locks and renting trucks or other moving equipment) through one or more TRSs.

A TRS is a corporation other than a REIT in which a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated as a TRS. If a TRS owns more than 35% of the total voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other than some activities relating to lodging and health care properties, a TRS may generally engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT. A TRS is subject to U.S. federal income tax as a regular C corporation.

No more than 20% of the value of a REIT’s total assets may consist of stock or securities of one or more TRSs. This requirement limits the extent to which we can conduct our activities through TRSs. The values of some of our assets, including assets that we hold through TRSs, may not be subject to precise determination, and values are subject to change in the future. In addition, the Code imposes a 100% tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s length basis. We intend to structure transactions with any TRS on terms that we believe are arm’s length to avoid incurring the 100% excise tax described above. There can be no assurances, however, that we will be able to avoid application of the 100% tax.

We may not have cash available to make distributions.

Our taxable income may exceed our cash flow for a year, which could necessitate our borrowing funds and/or subject us to tax, thus reducing the cash available for distribution to our stockholders. We intend to make

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cash distributions each yea r sufficient to satisfy REIT distribution requirements and to avoid liability for the REIT excise tax. There can be no assurance, however, that we will be able to do so. Our taxable income may substantially exceed our net income as determined based on GAAP, as well as our cash flow, because, for example, realized capital losses will be deducted in determining GAAP net income but may not be deductible in computing taxable income or because we acquired assets that generate taxable income in excess of economic income or in advance of the corresponding cash flow from the assets. Under the TCJA, signed into law on December 22, 2017, we generally will be required to recognize certain amounts in income no later than the time such amounts are reflected on our financ ial statements. The application of this rule may require the accrual of income with respect to certain sources earlier than would be the case under the otherwise applicable tax rules, although final regulations regarding the precise application of this rul e have not yet been promulgated. Also, in certain circumstances our ability to deduct interest expenses for U.S. federal income tax purposes may be limited by provisions of the TCJA. If the cash flow we generate in a particular year is less than our taxabl e income, we may be required to use cash reserves, incur short-term, or possibly long-term, debt or liquidate non-cash assets at rates or at times that are unfavorable in order to make the necessary distributions.

Our REIT qualification could be adversely affected by the REIT qualification of any REIT in which we hold an interest.

In connection with our conversion from a regulated investment company (a “RIC”) to a REIT, we disposed of the majority of our assets and acquired government securities and shares of publicly traded REITs. As a result, the qualification of our as a REIT has depended on the REIT qualification of the publicly traded REITs in which we have invested. Furthermore, we may continue to hold interests in publicly traded REITs, and as a result our REIT qualification may continue to depend on the REIT qualification of any publicly traded REITs in which we continue to hold an interest. We do not generally independently investigate the REIT qualification of such REITs, but rather generally rely on statements made by such REITs in their public filings. In the event that one or more of the publicly traded REITs in which we invested was not properly treated as a REIT for U.S. federal income tax purposes, or if our interests in these REITs were otherwise not treated as equity in a REIT for U.S. federal income tax purposes, it is possible that we may not have met certain of the REIT asset and income requirements, in which case we could have failed to qualify as a REIT. Similarly, if we hold an interest in a publicly traded REIT in the future that fails to qualify as a REIT, such failure could adversely impact our REIT qualification.

We could fail to qualify as a REIT if we have not distributed any earnings and profits attributable to a taxable year before we elected to be taxed as a REIT.

A corporation does not qualify as a REIT for a given taxable year if, as of the final day of the taxable year, the corporation has any undistributed earnings and profits that accumulated during a period that the corporation was not treated as a REIT. Because we were not treated as a REIT for our entire existence (such period prior to our election to be taxed as a REIT, the “Pre-REIT period”), it is possible that we could have undistributed earnings and profits from the Pre-REIT period, in which case we would be required to pay a deficiency dividend in order to comply with this requirement or could fail to qualify as a REIT. We believe that, since December 31, 2013, we have not had any earnings and profits accumulated from the Pre-REIT period because all such earnings and profits were distributed prior to December 31, 2013. In particular, prior to December 31, 2013, we believe that we qualified as a RIC for U.S. federal income tax purposes, and as a RIC, we distributed our earnings on an annual basis in order to avoid being subject to U.S. federal income tax on our undistributed earnings. However, if it is determined that we have accumulated earnings and profits from the Pre-REIT period, we could be required to pay a deficiency dividend to stockholders after the relevant determination in order to maintain our qualification as a REIT, or we could fail to qualify as a REIT.

We may not have satisfied requirements related to the ownership of our outstanding stock, which could cause us to fail to qualify as a REIT.

In order to qualify as a REIT, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, through the application of certain attribution rules under the Code, by five or fewer individuals, as defined in the Code to include specified entities, during the last half of any taxable year other than the first taxable year during which we qualified as a REIT (the “5/50 Test”). Prior to October 20, 2017, our charter did not contain customary REIT ownership restrictions and therefore did not ensure that we satisfied the 5/50 Test. Effective as of October 20, 2017, our charter was revised to include, among other things, certain customary ownership limitations that prohibit, among other limitations, any person from beneficially or constructively owning more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding share of our common stock or all

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classes and series of our capital stock. These provisions are inten ded to assist us in satisfying the 5/50 Test. With respect to the period between January 1, 2013 and October 20, 2017, we monitored purchases and transfers of shares of our common stock by regularly reviewing, among other things, ownership filings required by the federal securities laws to monitor the beneficial ownership of our shares in an attempt to ensure that we met the 5/50 Test. However, the attribution rules under the Code are broad, and we may not have had the information necessary to ascertain wit h certainty whether or not we satisfied the 5/50 Test during such period. As a result, no assurance can be provided that we satisfied the 5/50 Test during such period. If it were determined that we failed to satisfy the 5/50 Test, we could fail to qualify as a REIT or, assuming we qualify for a statutory relief provision under the Code, be required to pay a penalty tax.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge interest rate risk will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if (i) the instrument (a) hedges interest rate risk on liabilities used to carry or acquire real estate assets or (b) hedges an instrument described in clause (a) for a period following the extinguishment of the liability or the disposition of the asset that was previously hedged by the hedged instrument, and (ii) the relevant instrument is properly identified under applicable Treasury regulations. Income from hedging transactions that do not meet these requirements will generally constitute non-qualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRS will generally not provide any tax benefit, except for being carried back or forward against past or future taxable income in the TRS.

Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.

The U.S. federal income tax laws and regulations governing REITs and their stockholders, as well as the administrative interpretations of those laws and regulations, are constantly under review and may be changed at any time, possibly with retroactive effect. No assurance can be given as to whether, when, or in what form, the U.S. federal income tax laws applicable to us and our stockholders may be enacted. Changes to the U.S. federal income tax laws and interpretations of U.S. federal tax laws could adversely affect an investment in our common stock.

In addition, the TCJA, which was signed into law on December 22, 2017, significantly changed U.S. federal income tax laws applicable to businesses and their owners, including REITs and their stockholders, and have lessened the relative competitive advantage of operating as a REIT rather than as a C corporation. For additional discussion, see “Recent U.S. Federal Income Tax Legislation”.

Risks Related to Our Common Stock

The future sales of shares of our common stock may depress the price of our common stock and dilute stockholders’ beneficial ownership.

We cannot predict whether future issuances of shares of our common stock or the availability of shares of our common stock for resale in the open market will decrease the market price of our common stock. Any sales of a substantial number of shares of our common stock in the public market or the perception that such sales might occur, may cause the market price of our common stock to decline. In addition, future issuances of our common stock may be dilutive to existing stockholders.

Any future offerings of debt, which would be senior to our common stock upon liquidation, and/or preferred equity securities which may be senior to our common stock for purposes of dividend distributions or upon liquidation, may adversely affect the market price of our common stock.

In the future, we may increase our capital resources by making offerings of debt or preferred equity securities, including trust preferred securities, senior or subordinated notes and preferred stock. Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive

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distributions of our available assets prior to the holders of our common stock. Addi tional equity offerings may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Because our decis ion to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future off erings reducing the market price of our common stock and diluting their stock holdings in us.

The market price and trading volume of our common stock may vary substantially.

Our common stock is listed on NASDAQ under the symbol “SELF.” The stock markets, including NASDAQ, have experienced significant price and volume fluctuations over the past several years. As a result, the market price of our common stock is likely to be similarly volatile, and investors in our common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. Accordingly, no assurance can be given as to the ability of our stockholders to sell their common stock or the price that our stockholders may obtain for their common stock.

Some of the factors that could negatively affect the market price of our common stock include:

| • | our actual or projected operating results, financial condition, cash flows and liquidity or changes in business strategy or prospects;

| • | actual or perceived conflicts of interest with our directors, officers and employees;

| • | equity issuances by us, or share resales by our stockholders, or the perception that such issuances or resales may occur;

| • | the impact of accounting principles and policies on our financial positions and results;

| • | publication of research reports about us or the real estate industry;

| • | changes in market valuations of similar companies;

| • | adverse market reaction to any increased indebtedness we may incur in the future;

| • | additions to or departures of our key personnel;

| • | speculation in the press or investment community;

| • | our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts;

| • | increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock and would result in increased interest expenses on our debt;

| • | failure to maintain our REIT qualification or exclusion from registration under the 1940 Act, as amended;

| • | price and volume fluctuations in the stock market generally; and

| • | general market and economic conditions, including the current state of the credit and capital markets.

Market factors unrelated to our performance could also negatively impact the market price of our common stock. One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution rate as a percentage of our stock price relative to market interest rates. If market interest rates increase, prospective investors may demand a higher distribution rate or seek alternative investments paying higher dividends or interest. As a result, interest rate fluctuations and conditions in capital markets can affect the market value of our

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common stock. For instance, if interest rates rise, it is likely that the market price of our common stock will decrease as market rates on interest-bearing securities increase.

Item 1B. | Unresolved Staff Comments.

None.

Item 2. | Properties.

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GLOBAL SELF STORAGE STORES

(As of December 31, 2019)

|  |  |  | Year Store |  | Number |  |  | Net Leasable |  |  | December 31, 2019 Square Foot |  |  | December 31, 2018 Square Foot |
Property(1) |  | Address |  | Opened / Acquired-Managed |  | of Units |  |  | Square Feet |  |  | Occupancy % |  |  | Occupancy % |
OWNED STORES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
SSG BOLINGBROOK LLC |  | 296 North Weber Road, Bolingbrook, IL 60440 |  | 1997 / 2013 |  |  | 801 |  |  |  | 113,700 |  |  |  | 94.0 | % |  |  | 93.1 | %
SSG CLINTON LLC |  | 6 Heritage Park Road, Clinton, CT 06413 |  | 1996 / 2016 |  |  | 182 |  |  |  | 30,408 |  |  |  | 89.6 | % |  |  | 94.8 | %
SSG DOLTON LLC |  | 14900 Woodlawn Avenue, Dolton, IL 60419 |  | 2007 / 2013 |  |  | 652 |  |  |  | 86,590 |  |  |  | 93.6 | % |  |  | 93.1 | %
SSG FISHERS LLC |  | 13942 East 96th Street, McCordsville, IN 46055 |  | 2007 / 2016 |  |  | 409 |  |  |  | 82,011 |  |  |  | 89.2 | % |  |  | 93.7 | %
SSG LIMA LLC |  | 1910 West Robb Avenue, Lima, OH 60419 |  | 1996 / 2016 |  |  | 731 |  |  |  | 98,265 |  |  |  | 91.1 | % |  |  | 93.6 | %
SSG MERRILLVILLE LLC |  | 6590 Broadway, Merrillville, IN 46410 |  | 2005 / 2013 |  |  | 567 |  |  |  | 80,570 |  |  |  | 89.6 | % |  |  | 92.8 | %
SSG MILLBROOK LLC |  | 3814 Route 44, Millbrook, NY 12545 |  | 2008 / 2016 |  |  | 140 |  |  |  | 12,676 |  |  |  | 88.4 | % |  |  | 97.6 | %
SSG ROCHESTER LLC |  | 2255 Buffalo Road, Rochester, NY 14624 |  | 2010 / 2012 |  |  | 634 |  |  |  | 68,106 |  |  |  | 96.0 | % |  |  | 95.1 | %
SSG SADSBURY LLC |  | 21 Aim Boulevard, Sadsburyville, PA 19369 |  | 2006 / 2012 |  |  | 689 |  |  |  | 78,847 |  |  |  | 90.4 | % |  |  | 92.2 | %
SSG SUMMERVILLE I LLC |  | 1713 Old Trolley Road, Summerville, SC 29485 |  | 1990 / 2013 |  |  | 561 |  |  |  | 74,500 |  |  |  | 88.2 | % |  |  | 89.0 | %
SSG SUMMERVILLE II LLC |  | 900 North Gum Street, Summerville, SC 29483 |  | 1997 / 2013 |  |  | 249 |  |  |  | 43,210 |  |  |  | 90.4 | % |  |  | 83.3 | %
TOTAL/AVERAGE SAME-STORES |  |  |  |  |  |  | 5,615 |  |  |  | 768,883 |  |  |  | 91.4 | % |  |  | 92.5 | %
SSG WEST HENRIETTA LLC |  | 70 Erie Station Road, West Henrietta, NY 14586 |  | 2016 / 2019 |  |  | 452 |  |  |  | 48,250 |  |  |  | 75.7 | % |  | 69.8%(2) |
TOTAL/AVERAGE NON SAME-STORES |  |  |  |  |  |  | 452 |  |  |  | 48,250 |  |  |  | 75.7 | % |  |  | 69.8 | %
TOTAL/AVERAGE SAME-STORE AND NON SAME-STORE |  |  |  |  |  |  | 6,067 |  |  |  | 817,133 |  |  |  | 90.5 | % |  |  | 92.5 | %
MANAGED STORES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
TPM EDMOND LLC |  | 14000 N I 35 Service Rd, Edmond, OK 73013 |  | 2015 / 2019 |  |  | 617 |  |  |  | 136,718 |  |  |  | 93.5 | % |  | 85.4%(2) |
TOTAL/AVERAGE MANAGED STORES |  |  |  |  |  |  | 617 |  |  |  | 136,718 |  |  |  | 93.5 | % |  |  | 85.4 | %
TOTAL/AVERAGE ALL OWNED/MANAGED STORES |  |  |  |  |  |  | 6,684 |  |  |  | 953,851 |  |  |  | 90.9 | % |  |  | 92.5 | %

| (1) | Each property is directly owned or managed by the Company’s wholly owned subsidiary listed in the table.

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| (2) | This percentage is provided for informational purposes only and represents the pre-acquisition/management occupancy of the property on the indicated date. It is not included as part of the “Total/Average Same-Store and Non Same-Store” or “Total/Average All Owned/Managed Stores” occupancy percentages for December 31, 2018, which include only those properties owned and/or managed (as applicable) by the Company as of the indicated date.

Same-store occupancy does not include properties that have recently undergone significant expansion or redevelopment, or are recent acquisitions, such as our property in West Henrietta, NY.

On November 19, 2019, we completed the acquisition of Erie Station Storage, a self storage property located in West Henrietta, NY, for $6.2 million dollars (the “West Henrietta Property”). As of December 31, 2019, the West Henrietta Property featured seven buildings with a total of 452 storage units and 48,250 net leasable square feet. Storage options include both drive up access and climate-controlled units. The West Henrietta Property also has immediate expansion potential with an approved permit to commence construction of a 7,300 net leasable square feet self storage building.

In 2019, the Company broke ground on the Millbrook, NY expansion, which, upon completion in February 2020, added approximately 16,500 of gross square feet of all-climate-controlled units. As a result of the expansion construction, certain units at the existing Millbrook, NY property were required to be temporarily vacated. This resulted in artificially reduced occupancy at our Millbrook, NY property for the year ended December 31, 2019. There is no guarantee that we will experience demand for the newly added expansion or that we will be able to successfully lease-up the expansion to the occupancy level of our other properties.

Certain stores’ leasable square feet in the chart above includes outside auto/RV/boat storage space: approximately 13,000 square feet at SSG Sadsbury LLC; 15,700 square feet at SSG Bolingbrook LLC; 9,000 square feet at SSG Dolton LLC; 1,000 square feet at SSG Merrillville LLC; 7,200 square feet at SSG Summerville II LLC; and 8,750 square feet at SSG Clinton LLC. For SSG Lima LLC, approximately 12,683 square feet of non-storage commercial and student housing space is included. Approximately 34% of our total available units are climate-controlled, 58% are traditional, and 8% are parking.

In addition, as of December 31, 2019, we managed one store for a third party in Edmond, OK with 136,718-leasable square feet, bringing the total number of stores which we own and/or manage to 13, and total leasable square feet to 953,851.

Item 3. | Legal Proceedings.

From time to time, the Company or its subsidiaries may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. We are also subject to governmental or regulatory examinations or investigations. Examinations or investigations can result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the Company will seek to include in its financial statements the necessary provisions for losses that it believes are probable and estimable. Furthermore, the Company will seek to evaluate whether there exist losses which may be reasonably possible and, if material, make the necessary disclosures. The Company currently does not have any material pending legal proceedings to which the Company or any of its subsidiaries is a party or of which any of their property is the subject.

Item 4. | Mine Safety Disclosures.

Not applicable.

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PART II

Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

The Company’s shares of common stock are listed on NASDAQ under the ticker symbol SELF.

Holders

As of March 16, 2020, there were approximately 3,600 record and beneficial holders of the Company’s common stock.

Item 6. | Selected Financial Data.

Not applicable.

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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY LANGUAGE

The following discussion and analysis should be read in conjunction with our selected consolidated historical financial data together with the consolidated pro forma financial data and historical financial statements and related notes thereto included elsewhere in this annual report. We make statements in this section that may be forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this annual report entitled “Statement on Forward-looking Information.”

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements contained elsewhere in this annual report, which have been prepared in accordance with generally accepted accounting principles (“GAAP”). Our notes to the condensed consolidated financial statements contained elsewhere in this annual report describe the significant accounting policies essential to our condensed consolidated financial statements. Preparation of our financial statements requires estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there are material differences between these estimates, judgments and assumptions and actual facts, our financial statements may be affected.

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgment in its application. There are areas in which our judgment in selecting among available alternatives would not produce a materially different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially different result. See the notes to the condensed consolidated financial statements that contain additional information regarding our accounting policies and other disclosures.

Management’s Discussion and Analysis Overview

The Company is a self-administered and self-managed REIT that owns, operates, manages, acquires, develops and redevelops self storage properties (“stores” or “properties”) in the United States. Our stores are designed to offer affordable, easily accessible and secure storage space for residential and commercial customers. As of December 31, 2019, the Company owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma. The Company was formerly registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as a non-diversified, closed end management investment company. The Securities and Exchange Commission’s (“SEC”) order approving the Company’s application to deregister from the 1940 Act was granted on January 19, 2016. On January 19, 2016, the Company changed its name to Global Self Storage, Inc. from Self Storage Group, Inc., changed its SEC registration from an investment company to an operating company reporting under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and listed its common stock on NASDAQ under the symbol “SELF”.

The Company was incorporated on December 12, 1996 under the laws of the state of Maryland. The Company has elected to be treated as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). To the extent the Company continues to qualify as a REIT, it will not generally be subject to U.S. federal income tax, with certain limited exceptions, on its taxable income that is distributed to its stockholders.

Our store operations generated most of our net income for all periods presented herein. Accordingly, a significant portion of management’s time is devoted to seeking to maximize cash flows from our existing stores, as well as seeking investments in additional stores. The Company expects to continue to earn a majority of its gross income from its store operations as its current store operations continue to develop and as it makes additional store acquisitions. Over time, the Company expects to divest its remaining portfolio of investment securities and use the proceeds to acquire and operate additional stores. The Company expects its income from investment securities to continue to decrease as it continues to divest its holdings of investment securities.

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Financial Condition and Results of Operations

Our financing strategy is to minimize the cost of our capital in order to maximize the returns generated for our stockholders. For future acquisitions, the Company may continue to use various financing and capital raising alternatives including, but not limited to, debt and/or equity offerings (such as our recent rights offering that closed in the fourth quarter of 2019), credit facilities, mortgage financing, and joint ventures with third parties.

On June 24, 2016, certain of our wholly owned subsidiaries (“Term Loan Secured Subsidiaries”) entered into a loan agreement and certain other related agreements (collectively, the “Term Loan Agreement”) between the Term Loan Secured Subsidiaries and Insurance Strategy Funding IV, LLC (the “Term Loan Lender”). Under the Term Loan Agreement, the Term Loan Secured Subsidiaries are borrowing from Term Loan Lender in the principal amount of $20 million pursuant to a promissory note (the “Term Loan Promissory Note”). The Term Loan Promissory Note bears an interest rate equal to 4.192% per annum and is due to mature on July 1, 2036. Pursuant to a security agreement (the “Term Loan Security Agreement”), the obligations under the Term Loan Agreement are secured by certain real estate assets owned by the Term Loan Secured Subsidiaries. J.P. Morgan Investment Management, Inc. acted as Special Purpose Vehicle Agent of the Term Loan Lender. We entered into a non-recourse guaranty (the “Term Loan Guaranty,” and together with the Term Loan Agreement, the Term Loan Promissory Note and the Term Loan Security Agreement, the “Term Loan Documents”) on June 24, 2016 to guarantee the payment to the Term Loan Lender of certain obligations of the Term Loan Secured Subsidiaries under the Term Loan Agreement. The Term Loan Documents require the Term Loan Secured Subsidiaries and the Company to comply with certain covenants, including, among others, a minimum net worth test and other customary covenants. The Term Loan Lender may accelerate amounts outstanding under the Term Loan Documents upon the occurrence of an Event of Default (as defined in the Term Loan Agreement) including, but not limited to, the failure to pay amounts due or commencement of bankruptcy proceedings. The Company and the Term Loan Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Term Loan Documents. There is no material relationship between the Company, its Term Loan Secured Subsidiaries, or its affiliates and the Term Loan Lender, other than in respect of the Term Loan Documents. The foregoing description is qualified in its entirety by the full terms and conditions of the Term Loan Documents, filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to the Current Report on Form 8-K filed on June 30, 2016. We used the proceeds of such debt financing primarily in connection with store acquisitions and development.

On December 20, 2018, certain of our wholly owned subsidiaries (“Credit Facility Secured Subsidiaries”) entered into a revolving credit loan agreement (collectively, the “Credit Facility Loan Agreement”) between the Credit Facility Secured Subsidiaries and TCF National Bank (“Credit Facility Lender”). Under the Credit Facility Loan Agreement, the Credit Facility Secured Subsidiaries may borrow from the Credit Facility Lender in the principal amount of up to $10 million pursuant to a promissory note (the “Credit Facility Promissory Note”). The Credit Facility Promissory Note bears an interest rate equal to 3.00% over the One Month U.S. Dollar London Inter-Bank Offered Rate and is due to mature on December 20, 2021. The obligations under the Credit Facility Loan Agreement are secured by certain real estate assets owned by the Credit Facility Secured Subsidiaries. We entered into a guaranty of payment on December 20, 2018 (the “Credit Facility Guaranty,” and together with the Credit Facility Loan Agreement, the Credit Facility Promissory Note and related instruments, the “Credit Facility Loan Documents”) to guarantee the payment to the Credit Facility Lender of certain obligations of the Credit Facility Secured Subsidiaries under the Credit Facility Loan Agreement. The Company and the Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Credit Facility Loan Documents. The Company also maintains a bank account at the Credit Facility Lender. The foregoing description is qualified in its entirety by the full terms and conditions of the Credit Facility Loan Documents, filed as Exhibits 10.1 and 10.2 to the Current Report on Form 8-K filed on December 21, 2018. As of December 31, 2019, we have withdrawn proceeds of $4,914,000 under the Credit Facility Loan Agreement. We currently intend to strategically withdraw proceeds available under the Credit Facility Loan Agreement to fund: (i) the acquisition of additional self storage properties, (ii) expansions at existing self storage properties in our portfolio, and/or (iii) joint ventures with third parties for the acquisition and expansion of self storage properties.

We acquired one property in the year ended December 31, 2019. On November 19, 2019, we completed the acquisition of Erie Station Storage, a self storage property located in West Henrietta, NY, for $6.2 million dollars (the “West Henrietta Property”). The West Henrietta Property is located in the growing upstate suburban community of West Henrietta, New York, is near the Rochester Institute of Technology, and is approximately 11 miles from an existing Global Self Storage property in Gates, New York (a western suburb of Rochester). As of December 31, 2019, the West Henrietta Property featured seven buildings with a total of 452 storage units and 48,250 net leasable square feet. Storage options include both drive up access and climate-controlled units. The West Henrietta Property

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also has immediate expansion potential with an approved permit to commence construction of a 7,300 net leasable square feet self storage building.

We have been actively reviewing a number of other store and store portfolio acquisition candidates and have been working to further develop and expand our current stores.

In the year ended year ended December 31, 2019, we launched our third-party management platform. On October 23, 2019, we signed our first self storage client under our third-party management platform. As of December 31, 2019, the property, which was rebranded as “Global Self Storage,” had 136,718-leasable square feet and was comprised of 617 climate-controlled and non-climate-controlled units located in Edmond, Oklahoma.

We believe that our third-party management platform will provide an additional revenue stream through management fees and tenant insurance premiums and will help expand our brand awareness, and may also allow us to build a captive acquisition pipeline. We are actively marketing our third-party management platform to developers, single-property self storage operators, and small-portfolio self storage operators, and we believe these discussions may lead to the addition of new properties to our owned and/or third-party management portfolios. In addition, we may pursue third-party management opportunities owned by certain affiliates or joint venture partners for a fee, and utilize such relationships with third-party owners as a source for future acquisitions and investment opportunities.

In 2019, the Company broke ground on the Millbrook, NY expansion, which, upon completion in February 2020, added approximately 16,500 of gross square feet of all-climate-controlled units. There is no guarantee that we will experience demand for the newly added expansion or that we will be able to successfully lease-up the expansion to the occupancy level of our other properties.

On December 18, 2019, we completed our previously announced rights offering (the “rights offering”), which expired on December 13, 2019. At the closing of the rights offering, the Company sold and issued an aggregate of 1,601,291 shares of the Company's common stock (“common stock”) at the subscription price of $4.18 per whole share of common stock, pursuant to the exercise of subscriptions and oversubscriptions from the Company's stockholders. The Company raised aggregate gross proceeds of approximately $6.7 million in the rights offering.

As of December 31, 2019, we had capital resources totaling approximately $11.1 million, comprised of $4.2 million of cash and cash equivalents, $1.8 million of marketable securities, and $5.1 million available for withdrawal under the Credit Facility Loan Agreement. Capital resources derived from retained cash flow have been and are currently expected to continue to be negligible. Retained operating cash flow represents our expected cash flow provided by operating activities, less stockholder distributions and capital expenditures to maintain stores. These capital resources allow us to continue to execute our strategic business plan, which includes funding acquisitions, either directly or through joint ventures; expansion projects at our existing properties; and broadening our revenue base and pipeline of potential acquisitions through developing Global MaxManagementSM, our third-party management platform. Our board of directors regularly reviews our strategic business plan, including topics and metrices like capital formation, debt versus equity ratios, dividend policy, use of capital and debt, FFO and AFFO performance, and optimal cash levels.

We expect that the results of our operations will be affected by a number of factors. Many of the factors that will affect our operating results are beyond our control. The Company and its properties could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the current outbreak of the novel coronavirus (“COVID-19”). On March 11, 2020, the World Health Organization declared COVID-19 as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries, such as transportation, hospitality and entertainment. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty and risk

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with respect to the to the Company’s business, financial condition, results of operations and cash flows, such as the potential negative impact to occupancy at its properties, financing arrangements, increa sed costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. Accordingly, we cannot predict the extent to which our financial condition and results of operations will be affected at this time.

Results of Operations for the Year Ended December 31, 2019 Compared with the Year Ended December 31, 2018

Revenues

Total revenues increased from $8,110,979 during the year ended December 31, 2018 to $8,668,322 during the year ended December 31, 2019, an increase of $557,343‬, or 6.9%. Rental income increased from $7,850,870 during the year ended December 31, 2018 to $8,371,292 during the year ended December 31, 2019, an increase of $520,422‬, or 6.6%. The increase in total revenues was primarily attributable to our revenue rate management program of raising existing tenant rates, and to a lesser extent, due to an increase in net leased square footage. The increase in net leased square footage, which is the result of our West Henrietta, NY acquisition is expected to positively affect combined revenues in 2020.‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬Other store related income consists of customer insurance fees, sales of storage supplies, and other ancillary revenues. Other store related income increased from $260,109 in the year ended December 31, 2018 to $283,570 in the year ended December 31, 2019, an increase of $23,461‬, or 9.0%. This increase was primarily attributable to increased insurance fees due to the acquisition of the West Henrietta, NY property, the addition of the Edmond, OK property to our third-party management platform, and increased insurance participation at our wholly-owned and managed properties.‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

Operating Expenses

Total expenses increased from $6,685,407 during the year ended December 31, 2018 to $7,267,498 during the year ended December 31, 2019, an increase of $582,091‬, or 8.7%. Store operating expenses increased from $3,262,603 in the year ended December 31, 2018 to $3,577,358 in the year ended December 31, 2019, an increase of $314,755‬, or 9.6%, which was primarily attributable to increased real estate property tax expenses. As described in the section titled “Property Tax Expenses at Dolton, IL,” the increase in real estate property tax expenses for the year ended December 31, 2019, was attributable in significant part to the loss of our Class 8 tax incentive and subsequent property tax increase at SSG Dolton LLC.‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬Depreciation and amortization increased from $1,398,358 in the year ended December 31, 2018 to $1,438,908 in the year ended December 31, 2019, an increase of $40,550‬, or 2.9%.‬‬‬‬‬‬‬‬‬

‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

General and administrative expenses increased 16.4% or $300,358‬ for the year ended December 31, 2019 as compared to the year ended December 31, 2018. The change is primarily attributable to increased employee expenses in connection with increased allocated workforce power and increased accounting expenses relating to the engagement of our new independent registered public accounting firm.‬‬‬‬‬‬‬‬‬

‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

Business development, capital raising, and store acquisition expenses decreased from $198,000 to $124,428 during the year ended December 31, 2019 as compared to the year ended December 31, 2018. These costs primarily consisted of consulting costs in connection with business development, capital raising, and future potential store acquisitions, and expenses related to our third party management platform marketing initiatives. The majority of these expenses are non-recurring and fluctuate based on business development activity during the time period.

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Operating Income

Operating income decreased from $1,425,572 during the year ended December 31, 2018 to $1,400,824 during the year ended December 31, 2019, a decrease of $24,748‬ or 1.7%.‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

Other income (expense)

Interest expense on loans increased from $897,937 during the year ended December 31, 2018 to $1,075,576 during the year ended December 31, 2019, an increase of $177,639. This increase was primarily attributable to the amortization of loan procurement costs over the term of our Credit Facility Loan Agreement which was $152,542 for the year ended December 31, 2019.

Dividend and interest income was $71,666 during the year ended December 31, 2019 compared to $76,296 during the year ended December 31, 2018.

The Company recognizes changes in the fair value of its investments in equity securities with readily determinable fair values in net income and, as such, recorded an unrealized gain of $193,705 for the year ended December 31, 2019 compared to $15,517 during the year ended December 31, 2018.

Net income (loss)

For the year ended December 31, 2019, net income was $590,619 or $0.08 per fully diluted share. For the year ended December 31, 2018, net income was $619,448 or $0.08 per fully diluted share.

Non-GAAP Measures

Funds from Operations (“FFO”) and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and are considered helpful measures of REIT performance by REITs and many REIT analysts. NAREIT defines FFO as a REIT’s net income, excluding gains or losses from sales of property, and adding back real estate depreciation and amortization. FFO and FFO per share are not a substitute for net income or earnings per share. FFO is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes financing activities presented on our statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful. However, the Company believes that to further understand the performance of its stores, FFO should be considered along with the net income and cash flows reported in accordance with GAAP and as presented in the Company’s financial statements.

Adjusted FFO (“AFFO”) represents FFO excluding the effects of business development, capital raising, and acquisition related costs and non-recurring items, which we believe are not indicative of the Company’s operating results. We present AFFO because we believe it is a helpful measure in understanding our results of operations insofar as we believe that the items noted above that are included in FFO, but excluded from AFFO, are not indicative of our ongoing operating results. We also believe that the analyst community considers our AFFO (or similar measures using different terminology) when evaluating us. Because other REITs or real estate companies may not compute AFFO in the same manner as we do, and may use different terminology, our computation of AFFO may not be comparable to AFFO reported by other REITs or real estate companies.

We believe net operating income or “NOI” is a meaningful measure of operating performance because we utilize NOI in making decisions with respect to, among other things, capital allocations, determining current store values, evaluating store performance, and in comparing period-to-period and market-to-market store operating results. In addition, we believe the investment community utilizes NOI in determining operating performance and real estate values, and does not consider depreciation expense because it is based upon historical cost. NOI is defined as net store earnings before general and administrative expenses, interest, taxes, depreciation, and amortization.

NOI is not a substitute for net income, net operating cash flow, or other related GAAP financial measures, in evaluating our operating results.

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Same-Store Self Storage Operations

We consider our same-store portfolio to consist of only those stores owned and operated on a stabilized basis at the beginning and at the end of the applicable periods presented. We consider a store to be stabilized once it has achieved an occupancy rate that we believe, based on our assessment of market-specific data, is representative of similar self storage assets in the applicable market for a full year measured as of the most recent January 1 and has not been significantly damaged by natural disaster or undergone significant renovation or expansion. We believe that same-store results are useful to investors in evaluating our performance because they provide information relating to changes in store-level operating performance without taking into account the effects of acquisitions, dispositions or new ground-up developments. At December 31, 2019, we owned eleven same-store properties and one non-same-store property. The Company believes that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to, variances in occupancy, rental revenue, operating expenses, NOI, etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions or completed developments. Same-store results should not be used as a basis for future same-store performance or for the performance of the Company’s stores as a whole.

Same-store occupancy for the three months and year ended December 31, 2019 decreased by 1.1% to 91.4% from 92.5% for the same period in 2018. As a result of the Millbrook, NY expansion construction, certain units at the existing Millbrook, NY property were required to be temporarily vacated. This resulted in artificially reduced occupancy at our Millbrook, NY property for the year ended December 31, 2019 and was reflected in our same-store occupancy statistics.

We grew our top-line results by increasing same-store revenues by 3.9% for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and by 6.0% for the year ended December 31, 2019 versus the year ended December 31, 2018. Same-store cost of operations increased by 2.8% for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased by 8.5% for the twelve months ended December 31, 2019 versus the twelve months ended December 31, 2018. All major categories of expenses for same-store cost of operations (including categories for employment, professional, marketing, administrative, lien administration, and general) decreased for the year ended December 31, 2019, except for real estate property tax, which increased significantly. Same-store NOI increased by 4.6% for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased by 4.2% for the twelve months ended December 31, 2019 versus the twelve months ended December 31, 2018. As described in the section titled “Property Tax Expenses at Dolton, IL,” the increase in same-store cost of operations for the year ended December 31, 2019, was attributable in significant part to the loss of our Class 8 tax incentive and subsequent property tax increase at SSG Dolton LLC.

We believe that our results were driven by, among other things, our internet and digital marketing initiatives which helped maintain our overall average occupancy in the low 90% range as of December 31, 2019. Also, contributing to our results were our customer service efforts which we believe were essential in building local brand loyalty resulting in powerful referral and word-of-mouth market demand for our storage units and services. Another significant contributing factor to our results was our revenue rate management program which helped increase our total annualized revenue per leased square foot by 4.6% for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and by 6.8% for the twelve months ended December 31, 2019 versus the twelve months ended December 31, 2018.

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These results are summarized as follows:

SAME - STORE PROPERTIES

Twelve Months Ended December 31, |  | 2019 |  |  | 2018 |  |  | Variance |  |  | % Change |
Revenues |  | $ | 8,594,618 |  |  | $ | 8,111,226 |  |  | $ | 483,392 |  |  |  | 6.0 | %
Cost of operations |  | $ | 3,540,583 |  |  | $ | 3,262,601 |  |  | $ | 277,982 |  |  |  | 8.5 | %
Net operating income |  | $ | 5,054,035 |  |  | $ | 4,848,625 |  |  | $ | 205,410 |  |  |  | 4.2 | %
Depreciation and amortization |  | $ | 1,203,220 |  |  | $ | 1,193,787 |  |  | $ | 9,433 |  |  |  | 0.8 | %
Net leasable square footage at period end* |  |  | 768,883 |  |  |  | 765,507 |  |  |  | 3,376 |  |  |  | 0.4 | %
Net leased square footage at period end |  |  | 702,636 |  |  |  | 708,024 |  |  |  | (5,388 | ) |  |  | -0.8 | %
Overall square foot occupancy at period end |  |  | 91.4 | % |  |  | 92.5 | % |  |  | -1.1 | % |  |  | -1.2 | %
Total annualized revenue per leased square foot |  | $ | 12.23 |  |  | $ | 11.46 |  |  | $ | 0.78 |  |  |  | 6.8 | %
Total available leasable storage units* |  |  | 5,615 |  |  |  | 5,624 |  |  |  | (9 | ) |  |  | -0.2 | %
Number of leased storage units* |  |  | 5,058 |  |  |  | 5,079 |  |  |  | (21 | ) |  |  | -0.4 | %

SAME - STORE PROPERTIES

Three Months Ended December 31, |  | 2019 |  |  | 2018 |  |  | Variance |  |  | % Change |
Revenues |  | $ | 2,152,173 |  |  | $ | 2,072,359 |  |  | $ | 79,814 |  |  |  | 3.9 | %
Cost of operations |  | $ | 834,474 |  |  | $ | 812,099 |  |  | $ | 22,375 |  |  |  | 2.8 | %
Net operating income |  | $ | 1,317,699 |  |  | $ | 1,260,260 |  |  | $ | 57,439 |  |  |  | 4.6 | %
Depreciation and amortization |  | $ | 300,670 |  |  | $ | 299,662 |  |  | $ | 1,008 |  |  |  | 0.3 | %
Net leasable square footage at period end* |  |  | 768,883 |  |  |  | 765,507 |  |  |  | 3,376 |  |  |  | 0.4 | %
Net leased square footage at period end* |  |  | 702,636 |  |  |  | 708,024 |  |  |  | (5,388 | ) |  |  | -0.8 | %
Overall square foot occupancy at period end |  |  | 91.4 | % |  |  | 92.5 | % |  |  | -1.1 | % |  |  | -1.2 | %
Total annualized revenue per leased square foot |  | $ | 12.25 |  |  | $ | 11.71 |  |  | $ | 0.54 |  |  |  | 4.6 | %
Total available leasable storage units* |  |  | 5,615 |  |  |  | 5,624 |  |  |  | (9 | ) |  |  | -0.2 | %
Number of leased storage units* |  |  | 5,058 |  |  |  | 5,079 |  |  |  | (21 | ) |  |  | -0.4 | %

* From time to time, as guided by market conditions, net leasable square footage, net leased square footage and total available storage units at our properties may increase or decrease as a result of consolidation, division or reconfiguration of storage units. Similarly, leasable square footage may increase or decrease due to expansion or redevelopment of our properties.

The following table presents a reconciliation of same-store net operating income to net income as presented on our consolidated statements of operations for the periods indicated (unaudited):

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|  | For the Three Months Ended December 31, |  |  | For the Twelve Months Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Net income |  | $ | 16,718 |  |  | $ | 75,480 |  |  | $ | 590,619 |  |  | $ | 619,448 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Management fees and other income |  |  | (13,460 | ) |  | — |  |  |  | (13,460 | ) |  | — |
General and administrative |  |  | 482,747 |  |  |  | 460,605 |  |  |  | 2,126,804 |  |  |  | 1,826,446 |
Depreciation and amortization |  |  | 382,821 |  |  |  | 350,805 |  |  |  | 1,438,908 |  |  |  | 1,398,358 |
Business development, capital raising, and property acquisition costs |  |  | 28,443 |  |  |  | 173,000 |  |  |  | 124,428 |  |  |  | 198,000 |
Dividend and interest income |  |  | (19,840 | ) |  |  | (17,352 | ) |  |  | (71,666 | ) |  |  | (76,296 | )
Unrealized (gain) loss on marketable equity securities |  |  | 161,397 |  |  |  | (20,096 | ) |  |  | (193,705 | ) |  |  | (15,517 | )
Interest expense |  |  | 302,342 |  |  |  | 237,729 |  |  |  | 1,075,576 |  |  |  | 897,937 |
Non same-store revenues |  |  | (60,244 | ) |  | — |  |  |  | (60,244 | ) |  | — |
Non same-store cost of operations |  |  | 36,775 |  |  | — |  |  |  | 36,775 |  |  | — |
Other real estate expenses |  | — |  |  |  | 89 |  |  | — |  |  |  | 249 |
Total same-store net operating income |  | $ | 1,317,699 |  |  | $ | 1,260,260 |  |  | $ | 5,054,035 |  |  | $ | 4,848,625 |
|  | For the Three Months Ended December 31, |  |  | For the Twelve Months Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Same-store revenues |  | $ | 2,152,173 |  |  | $ | 2,072,359 |  |  | $ | 8,594,618 |  |  | $ | 8,111,226 |
Same-store cost of operations |  |  | 834,474 |  |  |  | 812,099 |  |  |  | 3,540,583 |  |  |  | 3,262,601 |
Total same-store net operating income |  | $ | 1,317,699 |  |  | $ | 1,260,260 |  |  | $ | 5,054,035 |  |  | $ | 4,848,625 |

Analysis of Same-Store Revenue

For the three months ended December 31, 2019, the 3.9% revenue increase was due primarily to a 4.6% increase in total annualized revenue per leased square foot. For the twelve months ended December 31, 2019, the 6.0% revenue increase was due primarily to a 6.8% increase in total annualized revenue per leased square foot. The increase in total annualized revenue per leased square foot was due primarily to existing tenant rent increases, and, to a lesser extent, increased move-in rental rates and decreased move-in rent “specials” discounting. Same store average overall square foot occupancy for all of the Company’s stores combined decreased to 91.4% in the twelve months ended December 31, 2019 from 92.5% in the twelve months ended December 31, 2018. As a result of the Millbrook, NY expansion construction, certain units at the existing Millbrook, NY property were required to be temporarily vacated. This resulted in artificially reduced occupancy at our Millbrook, NY property for the year ended December 31, 2019 and was reflected in our same-store occupancy statistics.

We believe that high occupancies help maximize our rental income. We seek to maintain our average square foot occupancy level at about 90% by regularly adjusting the rental rates and promotions offered to attract new tenants as well as adjusting our online marketing efforts in order to generate sufficient move-in volume to replace tenants that vacate. Demand fluctuates due to various local and regional factors, including the overall economy. Demand is generally higher in the summer months than in the winter months and, as a result, rental rates charged to new tenants are typically higher in the summer months than in the winter months.

We currently expect rental income growth, if any, to come from a combination of the following: (i) continued existing tenant rent increases, (ii) higher rental rates charged to new tenants, (iii) lower promotional discounts, and (iv) higher occupancies. Our future rental income growth will also be dependent upon many factors for each market that we operate in including, among other things, demand for self storage space, the level of competitor supply of self storage space, and the average length of stay of our tenants. Increasing existing tenant rental rates, generally on an annual basis, is a key component of our revenue growth. We typically determine the level of rental increases

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based upon our expectations regarding the impact of existing tenant rate increases on incremen tal move-outs. We currently expect existing tenant rent increases in 2020 to be about the same or lower than in 2019.

We believe that the current trends in move-in, move-out, in place contractual rents, and occupancy levels are consistent with our current expectation of continued revenue growth. However, such trends, when viewed in the short-term, are volatile and not necessarily predictive of our revenues going forward because they may be subject to many short-term factors. Such factors include, among others, initial move-in rates, seasonal factors, the unit size and geographical mix of the specific tenants moving in or moving out, the length of stay of the tenants moving in or moving out, changes in our pricing strategies, and the degree and timing of rate increases previously passed to existing tenants.

Importantly, we continue to refine our ongoing revenue management program which includes regular internet data scraping of local competitors’ prices. We do this in order to maintain our competitive market price advantage for our various sized storage units at our stores. This program helps us maximize each store’s occupancies and our self storage revenue and NOI. We believe that, through our various marketing initiatives, we can continue to attract high quality, long term tenants who we expect will be storing with us for years. As of December 31, 2019, our average tenant duration of stay was approximately 3.1 years, up from approximately 3.0 years for the same period in 2018. One of the results of our initiative to build a higher quality tenant base is a greater percentage of credit card paying customers. We believe that credit card payers rent for longer periods and accept greater rental rate increases.

Analysis of Same-Store Cost of Operations

Same-store cost of operations increased 2.8% or $22,375 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 8.5% or $277,982 for the twelve months ended December 31, 2019 versus the twelve months ended December 31, 2018. All major categories of expenses for same-store cost of operations (including categories for employment, professional, marketing, administrative, lien administration, and general) decreased for the year ended December 31, 2019, except for real estate property tax, which increased significantly. As described in the section titled “Property Tax Expenses at Dolton, IL,” the increase in same-store cost of operations for the year ended December 31, 2019, was attributable in significant part to the loss of our Class 8 tax incentive and subsequent property tax increase at SSG Dolton LLC.

Employment. On-site store manager, regional manager and district payroll expense decreased 9.0% or $25,941 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and decreased 0.1% or $580 for the twelve months ended December 31, 2019 as compared to the same period in 2018. This decrease was due primarily to lower employee health plan expenses resulting from our successful efforts to obtain more competitive employee health plan pricing and routine employee departures. We currently expect inflationary increases in compensation rates for existing employees and other increases in compensation costs as we potentially add new stores as well as district, regional, and store managers.

Real Estate Property Tax. Store property tax expense increased 29.1% or $71,843 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 32.8% or $326,105 for the twelve months ended December 31, 2019 as compared to the same period in 2018. The increase in property tax expense during the year ended December 31, 2019 is primarily due to an increase in property tax expense at our Dolton, IL property, which is described in the section titled “Property Tax Expenses at Dolton, IL”. We currently expect same-store property tax expenses to increase during 2020, primarily due to an expected phaseout of the Class 8 tax incentive granted to SSG Dolton LLC and increased property assessment valuations.

Administrative. We classify administrative expenses as bank charges related to processing the stores’ cash receipts, credit card fees, repairs and maintenance, utilities, landscaping, alarm monitoring and trash removal. Administrative expenses decreased 5.3% or $7,613 in the three months ended December 31, 2019 as compared to the same period in 2018, and decreased 2.6% or $17,421 in the twelve months ended December 31, 2019 as compared to the same period in 2018. We experienced a decrease in administrative expenses in the year ended December 31, 2019 due primarily to lower utilities expense and our successful efforts to obtain more competitive credit card fee pricing. Decreased expenses for utilities and credit card fees for the year ended December 31, 2019 contributed to the decrease in administrative expenses as compared with the same period in 2018. Credit card fees increased for the fourth quarter due to a higher proportion of rental payments being received through credit cards,

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which is one of the results of our initiatives in building a higher quality overall tenant base. We currently expect moderate increases in other direct store costs in 2020.

Repairs and maintenance expense decreased 32.7% or $10,436 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 8.4% or $10,549 for the twelve months ended December 31, 2019 as compared to the same period in 2018 due primarily to certain one-time repairs completed during the year ended 2019.

Our utility expenses are currently comprised of electricity, oil, and gas costs, which vary by store and are dependent upon energy prices and usage levels. Changes in usage levels are driven primarily by weather and temperature. Also, affecting our utilities expenses over time is our ongoing LED light replacement program at all of our stores which has already resulted in lower electricity usage. Utility expense decreased 15.8% or $8,381 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and decreased 7.1% or $17,036 for the twelve months ended December 31, 2019 as compared to the same period in 2018 primarily due to temperature and weather-related conditions. It is difficult to estimate future utility costs because weather, temperature, and energy prices are volatile and unpredictable. However, based upon current trends and expectations regarding commercial electricity rates, we currently expect inflationary increases in rates combined with lower usage resulting in slightly higher net utility costs in 2020.

Landscaping expenses, which include snow removal costs, increased 34.1% or $7,630 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 5.3% or $6,314 in the twelve months ended December 31, 2019 compared to the same period in 2018. Landscaping expense levels are dependent upon many factors such as weather conditions, which can impact landscaping needs including, among other things, snow removal, inflation in material and labor costs, and random events. We currently expect inflationary increases in landscaping expense in 2020, excluding snow removal expense, which is primarily weather dependent and unpredictable.

Marketing. Marketing expense is comprised principally of internet advertising and the operating costs of our 24/7 kiosk and telephone call and reservation center. Marketing expense varies based upon demand, occupancy levels, and other factors. Internet advertising, in particular, can increase or decrease significantly in the short term in response to these factors. Marketing expense increased 3.5% or $1,836 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and decreased 1.5% or $3,580 for the twelve months ended December 31, 2019 as compared to the same period in 2018 primarily due to lower internet advertising and promotion expenses during the year ended 2018. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to increase in 2020.

General. Other direct store costs include general expenses incurred at the stores. General expenses include items such as store insurance, business license costs, and the cost of operating each store’s rental office including supplies and telephone and data communication lines. General expenses decreased 24.7% or $18,347 in the three months ended December 31, 2019 as compared to the same period in 2018, and decreased 7.3% or $20,269 in the twelve months ended December 31, 2019 as compared to the same period in 2018, primarily due to decreased expenses for travel and office supplies, and dues and subscriptions.

Lien Administration. Lien administration expenses increased 9.8% or $601 in the three months ended December 31, 2019 as compared to the same period in 2018, and decreased 10.4% or $2,457 in the twelve months ended December 31, 2019 as compared to the same period in 2018. Decreased tenants’ stored items auctions contributed to the decreased expenses. We currently expect moderate increases in other direct store costs in 2020.

Combined Same-Store and Non Same-Store Self Storage Operations

At December 31, 2019, we owned eleven same-store properties and one non same-store property. The non same-store property is SSG West Henrietta LLC.

Combined same-store and non same-store average overall square foot occupancy at the end of the three months and year ended December 31, 2019 decreased by 2.0% to 90.5% from 92.5% for the same period in 2018. Combined same-store and non same-store occupancy includes all of our properties as of the indicated date, including

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those that have recently undergone significant expansion or redevelopment, or are recent acquisitions, such as our property in West Henrietta, NY.

We grew our top-line results by increasing combined same-store and non same-store (“Combined store”) revenues by 6.8% for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and by 6.7% for the twelve months ended December 31, 2019 versus the twelve months ended December 31, 2018. Combined store cost of operations increased by 7.3% for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased by 9.6% for the twelve months ended December 31, 2019 versus the twelve months ended December 31, 2018. Combined store NOI increased by 6.4% for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and by 4.7% for the twelve months ended December 31, 2019 versus the twelve months ended December 31, 2018. As described in the section titled “Property Tax Expenses at Dolton, IL,” the increase in combined same-store and non same-store cost of operations for the year ended December 31, 2019, was attributable in significant part to the loss of our Class 8 tax incentive and subsequent property tax increase at SSG Dolton LLC.

We believe that our results were driven by, among other things, our internet and digital marketing initiatives which helped maintain our overall average occupancy in the low 90% range as of December 31, 2019. Also, contributing to our strong results were our customer service efforts which we believe were essential in building local brand loyalty resulting in referral and word-of-mouth market demand for our storage units and services.

These results are summarized as follows:

COMBINED SAME - STORE AND NON SAME - STORE PROPERTIES

Twelve Months Ended December 31, |  | 2019 |  |  | 2018 |  |  | Variance |  |  | % Change |
Revenues |  | $ | 8,654,862 |  |  | $ | 8,111,226 |  |  | $ | 543,636 |  |  |  | 6.7 | %
Cost of operations |  | $ | 3,577,358 |  |  | $ | 3,262,601 |  |  | $ | 314,757 |  |  |  | 9.6 | %
Net operating income |  | $ | 5,077,504 |  |  | $ | 4,848,625 |  |  | $ | 228,879 |  |  |  | 4.7 | %
Depreciation and amortization |  | $ | 1,234,174 |  |  | $ | 1,193,787 |  |  | $ | 40,387 |  |  |  | 3.4 | %
Net leasable square footage at period end* |  |  | 817,132 |  |  |  | 765,507 |  |  |  | 51,625 |  |  |  | 6.7 | %
Net leased square footage at period end |  |  | 739,161 |  |  |  | 708,024 |  |  |  | 31,137 |  |  |  | 4.4 | %
Overall square foot occupancy at period end |  |  | 90.5 | % |  |  | 92.5 | % |  |  | -2.0 | % |  |  | -2.2 | %
Total annualized revenue per leased square foot |  | $ | 11.71 |  |  | $ | 11.46 |  |  | $ | 0.25 |  |  |  | 2.2 | %
Total available leasable storage units |  |  | 6,067 |  |  |  | 5,624 |  |  |  | 443 |  |  |  | 7.9 | %
Number of leased storage units* |  |  | 5,369 |  |  |  | 5,079 |  |  |  | 290 |  |  |  | 5.7 | %

COMBINED SAME - STORE AND NON SAME - STORE PROPERTIES

Three Months Ended December 31, |  | 2019 |  |  | 2018 |  |  | Variance |  |  | % Change |
Revenues |  | $ | 2,212,417 |  |  | $ | 2,072,359 |  |  | $ | 140,058 |  |  |  | 6.8 | %
Cost of operations |  | $ | 871,249 |  |  | $ | 812,099 |  |  | $ | 59,150 |  |  |  | 7.3 | %
Net operating income |  | $ | 1,341,168 |  |  | $ | 1,260,260 |  |  | $ | 80,908 |  |  |  | 6.4 | %
Depreciation and amortization |  | $ | 331,624 |  |  | $ | 299,662 |  |  | $ | 31,962 |  |  |  | 10.7 | %
Net leasable square footage at period end* |  |  | 817,132 |  |  |  | 765,507 |  |  |  | 51,625 |  |  |  | 6.7 | %
Net leased square footage at period end |  |  | 739,161 |  |  |  | 708,024 |  |  |  | 31,137 |  |  |  | 4.4 | %
Overall square foot occupancy at period end |  |  | 90.5 | % |  |  | 92.5 | % |  |  | -2.0 | % |  |  | -2.2 | %
Total annualized revenue per leased square foot |  | $ | 11.97 |  |  | $ | 11.71 |  |  | $ | 0.26 |  |  |  | 2.2 | %
Total available leasable storage units |  |  | 6,067 |  |  |  | 5,624 |  |  |  | 443 |  |  |  | 7.9 | %
Number of leased storage units* |  |  | 5,369 |  |  |  | 5,079 |  |  |  | 290 |  |  |  | 5.7 | %

* From time to time, as guided by market conditions, net leasable square footage, net leased square footage and total available storage units at our properties may increase or decrease as a result of consolidation, division or

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reconfiguration of storage units. Similarly, leasable square footage may increase or decrease due to expansion or redevelopment of our properties.

The following table presents a reconciliation of combined same-store and non same-store net operating income to net income as presented on our consolidated statements of operations for the periods indicated (unaudited):

|  | For the Three Months Ended December 31, |  |  | For the Twelve Months Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Net income |  | $ | 16,718 |  |  | $ | 75,480 |  |  | $ | 590,619 |  |  | $ | 619,448 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Management fees and other income |  |  | (13,460 | ) |  | — |  |  |  | (13,460 | ) |  | — |
General and administrative |  |  | 482,747 |  |  |  | 460,605 |  |  |  | 2,126,804 |  |  |  | 1,826,446 |
Depreciation and amortization |  |  | 382,821 |  |  |  | 350,805 |  |  |  | 1,438,908 |  |  |  | 1,398,358 |
Business development, capital raising, and property acquisition costs |  |  | 28,443 |  |  |  | 173,000 |  |  |  | 124,428 |  |  |  | 198,000 |
Dividend and interest income |  |  | (19,840 | ) |  |  | (17,352 | ) |  |  | (71,666 | ) |  |  | (76,296 | )
Unrealized (gain) loss on marketable equity securities |  |  | 161,397 |  |  |  | (20,096 | ) |  |  | (193,705 | ) |  |  | (15,517 | )
Interest expense |  |  | 302,342 |  |  |  | 237,729 |  |  |  | 1,075,576 |  |  |  | 897,937 |
Other real estate expenses |  | — |  |  |  | 89 |  |  | — |  |  |  | 249 |
Total combined same-store and non same- store net operating income |  | $ | 1,341,168 |  |  | $ | 1,260,260 |  |  | $ | 5,077,504 |  |  | $ | 4,848,625 |
|  | For the Three Months Ended December 31, |  |  | For the Twelve Months Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Combined same-store and non same-store revenues |  | $ | 2,212,417 |  |  | $ | 2,072,359 |  |  | $ | 8,654,862 |  |  | $ | 8,111,226 |
Combined same-store and non same-store cost of operations |  |  | 871,249 |  |  |  | 812,099 |  |  |  | 3,577,358 |  |  |  | 3,262,601 |
Total combined same-store and non same-store net operating income |  | $ | 1,341,168 |  |  | $ | 1,260,260 |  |  | $ | 5,077,504 |  |  | $ | 4,848,625 |

Analysis of Combined Same-Store and Non Same-Store Revenue

Combined same-store and non same-store average overall square foot occupancy at the end of the three months and year ended December 31, 2019 decreased by 2.0% to 90.5% from 92.5% for the same period in 2018.

For the three months ended December 31, 2019, the 6.8% revenue increase as compared to the same period in 2018 was due primarily to a 4.4% increase in net leased square footage, and the results of our revenue rate management program of raising existing tenant rates. This increase in net leased square feet, which is the result of our West Henrietta, NY acquisition is expected to positively affect combined revenues in 2020. For the twelve months ended December 31, 2019, revenue increased 6.7%, as compared to the twelve months ended December 31, 2018, due primarily to the positive results of our revenue rate management program of raising existing tenant rates, and to a lesser extent, additional revenues from the acquisition at the West Henrietta, NY property. Combined revenues benefited from existing tenant rent increases, an increase in available climate-controlled leasable square feet, and, to a lesser extent, increased move-in rental rates, and decreased move-in rent “specials” discounting.

We believe that high occupancies help maximize our rental income. We seek to maintain an average square foot occupancy level at or above 90% by regularly adjusting the rental rates and promotions offered to attract new tenants as well as adjusting our marketing efforts on the internet in order to generate sufficient move-in volume to replace tenants that vacate. Demand fluctuates due to various local and regional factors, including the overall

41

economy. Dem and is typically higher in the summer months than in the winter months and, as a result, rental rates charged to new tenants are typically higher in the summer months than in the winter months.

We currently expect rental income growth, if any, to come from a combination of the following: (i) continued existing tenant rent increases, (ii) higher rental rates charged to new tenants, (iii) lower promotional discounts and (iv) higher occupancies. Our future rental income growth will likely also be dependent upon many factors for each market that we operate in, including demand for self storage space, the level of competitor supply of self storage space, and the average length of stay of our tenants. Increasing existing tenant rental rates, generally on an annual basis, is a key component of our revenue growth. We typically determine the level of rental increases based upon our expectations regarding the impact of existing tenant rate increases on incremental move-outs. We currently expect existing tenant rent increases in 2020 to be about the same or lower than in 2019.

We believe that the current trends in move-in, move-out, in place contractual rents and occupancy levels are consistent with our current expectation of continued revenue growth. However, such trends, when viewed in the short-term, are volatile and not necessarily be predictive of our revenues going forward because they are subject to many short-term factors. Such factors include, among others, initial move-in rates, seasonal factors, the unit size and geographical mix of the specific tenants moving in or moving out, the length of stay of the tenants moving in or moving out, changes in our pricing strategies, and the degree and timing of rate increases previously passed to existing tenants.

Importantly, we continue to refine our ongoing revenue management program which includes regular internet data scraping of local competitors’ prices. We do this in order to maintain our competitive market price advantage for our various sized storage units at our stores. This program helps us seek to maximize each store’s occupancies and our self storage revenue and NOI. We believe that through our various marketing initiatives, we can seek to continue to attract high quality, long term tenants who we expect will be storing with us for years. As of December 31, 2019, our average tenant duration of stay was approximately 2.9 years, up from approximately 2.8 years for the same period in 2018. One of the results of our initiative to build a higher quality tenant base is a greater percentage of credit card paying customers. We believe that credit card payers rent for longer periods and accept greater rental rate increases.

Analysis of Combined Same-Store and Non Same-Store Cost of Operations

Combined same-store and non same-store cost of operations increased 7.3% or $59,150 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 9.6% or $314,758 for the twelve months ended December 31, 2019 versus the twelve months ended December 31, 2018. The year over year increase in combined same-store and non same-store cost of operations was due primarily to increased store level expenses relating to real estate property tax. As described in the section titled “Property Tax Expenses at Dolton, IL,” the increase in combined same-store and non same-store cost of operations for the year ended December 31, 2019, was attributable in significant part to the loss of our Class 8 tax incentive and subsequent property tax increase at SSG Dolton LLC.

Employment. On-site store manager payroll expense decreased 6.2% or $17,834 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 0.7% or $7,527 for the twelve months ended December 31, 2019 as compared to the same period in 2018. The increase for the year ended December 31, 2019, was due primarily to an increase in the number of store level employees, and wage increases. We currently expect inflationary increases in compensation rates for existing employees and other increases in compensation costs as we potentially add new stores as well as district and regional managers.

Real Estate Property Tax. Store property tax expense increased 32.2% or $79,404 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 33.6% or $333,666 in the twelve months ended December 31, 2019 as compared to the same period in 2018. The increase in property tax expense during the year ended 2019 versus 2018 is primarily due to an increase in property tax expense at our Dolton, IL property, which is described in the section titled “Property Tax Expenses at Dolton, IL”. We currently expect store property tax expenses to increase during 2020, primarily due to the phaseout of the Class 8 tax incentive granted to SSG Dolton LLC and higher assessed property values.

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Administrative. We classify administrative expenses as bank charges related to processi ng the stores’ cash receipts, credit card fees, repairs and maintenance, utilities, landscaping, alarm monitoring and trash removal. Administrative expenses decreased 1.6% or $2,293 in the three months ended December 31, 2019 as compared to the same period in 2018, and decreased 1.8% or $12,100 in the twelve months ended December 31, 2019 as compared to the same period in 2018. We experienced a decrease in administrative expenses for the year ended December 31, 2019 due primarily to lower utilities expense and our successful efforts to obtain more competitive credit card fee pricing. Credit card fees increased for the fourth quarter of 2019 due to a higher proportion of rental payments being received through credit cards, which is one of the results of our i nitiatives in building a higher quality overall tenant base. We currently expect moderate increases in other direct store costs in 2020.

Repairs and maintenance expense decreased 29.5% or $9,425 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 9.25% or $11,559 for the twelve months ended December 31, 2019 as compared to the same period in 2018. Contributing to the increase in repair and maintenance expense for the year ended December 31, 2019, is certain one-time repairs completed during the year ended 2019. We anticipate continued progress on our LED light replacement program throughout 2020. At our stores fully converted to LED lighting, we have realized utilities expense savings year-over-year of approximately 10% to 40% depending on the store due to lower kilowatt per hour usage.

Our utility expenses are currently comprised of electricity, oil, and gas costs, which vary by store and are dependent upon energy prices and usage levels. Changes in usage levels are driven primarily by weather and temperature. Also, affecting our utilities expenses over time is our ongoing LED light replacement program at all of our stores which has already resulted in lower electricity usage. Utility expense decreased 10.6% or $5,639 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and decreased 6.0% or $14,294 for the twelve months ended December 31, 2019 as compared to the same period in 2018 primarily due to temperature and weather-related conditions. It is difficult to estimate future utility costs because weather, temperature, and energy prices are volatile and unpredictable. However, based upon current trends and expectations regarding commercial electricity rates, we currently expect inflationary increases in rates combined with lower usage resulting in slightly higher net utility costs in 2020.

Landscaping expenses, which include snow removal costs, increased 39.9% or $8,931 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 6.4% or $7,616 in the twelve months ended December 31, 2019 compared to the same period in 2018 primarily due to certain one-time landscaping expenses incurred during the fourth quarter of 2019. Landscaping expense levels are dependent upon many factors such as weather conditions, which can impact landscaping needs including, among other things, snow removal, inflation in material and labor costs, and random events. We currently expect inflationary increases in landscaping expense in 2020, excluding snow removal expense, which is primarily weather dependent and unpredictable.

Marketing. Marketing expense is comprised principally of internet advertising and the operating costs of our 24/7 kiosk and telephone call and reservation center. Marketing expense varies based upon demand, occupancy levels, and other factors. Internet advertising, in particular, can increase or decrease significantly in the short term in response to these factors. Marketing expense increased 18.3% or $9,729 for the three months ended December 31, 2019 versus the three months ended December 31, 2018, and increased 1.8% or $4,314 for the twelve months ended December 31, 2019 as compared to the same period in 2018 primarily due to increased internet advertising and promotion expense for our newly acquired property in West Henrietta, NY. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to increase in 2020.

General. Other direct store costs include general expenses incurred at the stores. General expenses include items such as store insurance, business license costs, and the cost of operating each store’s rental office including supplies and telephone and data communication lines. General expenses decreased 14.3% or $10,604 in the three months ended December 31, 2019 as compared to the same period in 2018, and decreased 4.5% or $12,525 in the twelve months ended December 31, 2019 as compared to the same period in 2018, primarily due to decreased expenses for travel, office supplies, and dues and subscriptions.

Property Tax Expenses at Dolton, IL

Late in the third quarter of 2017, our Dolton, IL property was reassessed by the municipality and separately, our Class 8 tax incentive renewal hearing was held. As a result of those two events, our Dolton, IL property was

43

reassessed at approximately 52% higher and the Class 8 tax incentive was not renewed. These events were applied retroactively to take effect on January 1, 2017. The co mbined impact was an increase in property tax expenses from $105,000 during 2016 to $210,000 during 2017, $240,000 during 2018 and $344,000 during 2019. Due to the timing and retroactive effect of these events in 2017, we recorded the entire $105,000 incre ase, during the fourth quarter of calendar year 2017. The Class 8 tax incentive phases out over the years 2017, 2018, 2019 and 2020, and during such 2020 period we currently expect the property tax expenses at our Dolton, IL property to increase by approxi mately 20%. Both the property tax reassessment and our Class 8 tax incentive renewal status are currently under appeal. However, there is no guarantee that either the assessment will be reduced or our Class 8 tax incentive status will be reinstated.

Analysis of Global Self Storage Funds from Operations (“FFO”) and Funds from Operations as Adjusted (“AFFO”)

The following tables present a reconciliation and computation of net income to FFO and AFFO and earnings per share to FFO and AFFO per share (unaudited):

|  | Three Months |  |  | Three Months |  |  | Twelve Months |  |  | Twelve Months |
|  | Ended |  |  | Ended |  |  | Ended |  |  | Ended |
|  | December 31, 2019 |  |  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Net income |  | $ | 16,718 |  |  | $ | 75,480 |  |  | $ | 590,619 |  |  | $ | 619,448 |
Eliminate items excluded from FFO: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized (gain) loss on marketable equity securities |  |  | 161,397 |  |  |  | (20,096 | ) |  |  | (193,705 | ) |  |  | (15,517 | )
Depreciation and amortization |  |  | 382,821 |  |  |  | 350,805 |  |  |  | 1,438,908 |  |  |  | 1,398,358 |
FFO attributable to common stockholders |  |  | 560,936 |  |  |  | 406,189 |  |  |  | 1,835,822 |  |  |  | 2,002,289 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation expense related to stock-based awards |  |  | (32,331 | ) |  |  | 26,730 |  |  |  | 102,989 |  |  |  | 80,771 |
Business development, capital raising, and property acquisition costs |  |  | 28,443 |  |  |  | 173,000 |  |  |  | 124,428 |  |  |  | 198,000 |
AFFO attributable to common stockholders |  | $ | 557,048 |  |  | $ | 605,919 |  |  | $ | 2,063,239 |  |  | $ | 2,281,060 |
Earnings per share attributable to common stockholders - basic |  | $ | 0.00 |  |  | $ | 0.01 |  |  | $ | 0.08 |  |  | $ | 0.08 |
Earnings per share attributable to common stockholders - diluted |  | $ | 0.00 |  |  | $ | 0.01 |  |  | $ | 0.08 |  |  | $ | 0.08 |
FFO per share - diluted |  | $ | 0.07 |  |  | $ | 0.05 |  |  | $ | 0.24 |  |  | $ | 0.26 |
AFFO per share - diluted |  | $ | 0.07 |  |  | $ | 0.08 |  |  | $ | 0.27 |  |  | $ | 0.30 |
Weighted average shares outstanding - basic |  |  | 7,879,132 |  |  |  | 7,626,856 |  |  |  | 7,699,966 |  |  |  | 7,622,287 |
Weighted average shares outstanding - diluted |  |  | 7,886,098 |  |  |  | 7,626,856 |  |  |  | 7,702,117 |  |  |  | 7,624,122 |

Analysis of Global Self Storage Store Expansions

In addition to actively reviewing a number of store and portfolio acquisition candidates, we have been working to further develop and expand our current stores.

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In 201 9, the Company broke ground on the Millbrook, NY expansion, which, upon completion in February 2020, added approximately 16,500 of gross square feet of all-climate-controlled units. There is no guarantee that we will experience demand for the newly added e xpansion or that we will be able to successfully lease-up the expansion to the occupancy level of our other properties.

Analysis of Realized and Unrealized Gains (Losses)

Unrealized gains and losses on the Company’s investment in marketable equity securities for the twelve months ended December 31, 2019 and December 31, 2018 were $193,705 and $15,517, respectively. There were no realized gains for the sale of marketable equity securities during 2019 or 2018. In accordance with the adoption of ASU 2016-01, as of January 1, 2018, the Company recognizes changes in the fair value of its investments in equity securities with readily determinable fair values in net income. Previously, changes in fair value of the Company’s investments in equity securities were recognized in accumulated other comprehensive income on the Company’s consolidated balance sheets. As we continue to acquire and/or develop additional stores, as part of the funding for such activities, we plan to liquidate our investment in marketable equity securities and potentially realize gains or losses. As of December 31, 2019, our unrealized gain on marketable equity securities was $1,005,825. There were no realized gains or losses for the twelve months ended December 31, 2019 and December 31, 2018, respectively.

Recent U.S. Federal Income Tax Legislation

On December 22, 2017, the TCJA was signed into law. The TCJA made significant changes to U.S. federal income tax laws applicable to businesses and their owners, including REITs and their stockholders. Certain key provisions of the TCJA that could impact the Company and its stockholders, include the following:

| • | Reduced Tax Rates. The highest individual U.S. federal income tax rate on ordinary income is reduced from 39.6% to 37% (through taxable years ending in 2025), and the maximum corporate income tax rate is reduced from 35% to 21%. In addition, individuals, trust, and estates that own the Company’s stock are permitted to deduct up to 20% of dividends received from the Company (other than dividends that are designated as capital gain dividends or qualified dividend income), generally resulting in an effective maximum U.S. federal income tax rate of 29.6% on such dividends (through taxable years ending in 2025). Furthermore, the amount that the Company is required to withhold on distributions to non-U.S. stockholders that are treated as attributable to gains from the Company’s sale or exchange of U.S. real property interests is reduced from 35% to 21%.

| • | Net Operating Losses. The Company may not use net operating losses generated beginning in 2018 to offset more than 80% of the Company’s taxable income (prior to the application of the dividends paid deduction). Net operating losses generated beginning in 2018 can be carried forward indefinitely but can no longer be carried back.

| • | Limitation on Interest Deductions. The amount of interest expense that certain taxpayers, including the Company and its TRSs, may deduct for a taxable year is limited to the sum of (i) the taxpayer’s business interest income for the taxable year, and (ii) 30% of the taxpayer’s “adjusted taxable income” for the taxable year. For taxable years beginning before January 1, 2022, adjusted taxable income means earnings before interest, taxes, depreciation, and amortization (“EBITDA”); for taxable years beginning on or after January 1, 2022, adjusted taxable income is limited to earnings before interest and taxes (“EBIT”). Taxpayers engaged in certain real estate businesses, including real estate rental, operation, and management, can generally elect to be treated as an “electing real property trade or business,” in which case the limitation described above generally will not apply. It is expected that the Company would be entitled to make this election. An electing real property trade or business is required to use the alternative depreciation system, which generally results in longer depreciation periods and therefore lower depreciation deductions for certain categories of tangible property.

| • | Alternative Minimum Tax. The corporate alternative minimum tax is eliminated.

| • | Income Accrual. The Company is required to recognize certain items of income for U.S. federal income tax purposes no later than the Company would report such items on its financial statements.

45

|  | This provision may override many of the U.S. federal income tax rules relating to the timing of income inclusions.

Prospective investors are urged to consult with their tax advisors regarding the potential effects of the TCJA or other legislative, regulatory or administrative developments on an investment in the Company’s common stock.

Item 7A. | Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 8. | Financial Statements and Supplementary Data.

The financial statements are included in this annual report beginning on page F-3.

Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

There were no disagreements with our accountants on accounting and financial disclosures during the last two fiscal years.

Item 9A. | Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures to ensure that information required to be disclosed in the reports we file pursuant to the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide a reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We have a disclosure controls and procedures committee, comprised of the Chief Executive Officer and Chief Financial Officer, which meets as necessary and is responsible for considering the materiality of information and determining our disclosure obligations on a timely basis.

The disclosure controls and procedures committee carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, audit committee, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that:

| • | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

| • | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and board of directors; and

46

| • | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effec t on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, our management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework).

Based on this assessment, our management believes that, as of December 31, 2019, our internal control over financial reporting was effective based on those criteria.

Changes in Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) that occurred during our fiscal fourth quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. | Other Information.

Not applicable.

47

PART III

Item 10. | Directors, Executive Officers and Corporate Governance.

The information regarding our executive officers and certain other matters required by Item 401 of Regulation S-K is incorporated herein by reference to our definitive proxy statement relating to our annual meeting of stockholders (the “Proxy Statement”), to be filed with the SEC within 120 days after December 31, 2019.

The information regarding compliance with Section 16(a) of the Exchange Act required by Item 405 of Regulation S-K is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2019.

The information regarding our Code of Business Conduct and Ethics required by Item 406 of Regulation S-K is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2019.

The information regarding certain matters pertaining to our corporate governance required by Item 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is incorporated by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2019.

Item 11. | Executive Compensation.

The information regarding executive compensation and other compensation related matters required by Items 402 and 407(e)(4) and (e)(5) of Regulation S-K is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2019.

Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The tables on equity compensation plan information and beneficial ownership of the Company required by Items 201(d) and 403 of Regulation S-K are incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2019.

Item 13. | Certain Relationships and Related Transactions, and Director Independence.

The information regarding transactions with related persons, promoters and certain control persons and trustee independence required by Items 404 and 407(a) of Regulation S-K is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2019.

Item 14. | Principal Accounting Fees and Services.

The information concerning principal accounting fees and services and the Audit Committee’s pre-approval policies and procedures required by Item 14 is incorporated herein by reference to the Proxy Statement to be filed with the SEC within 120 days after December 31, 2019.

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PART IV

Item 15. | Exhibits, Financial Statement Schedules.

(a) Documents filed as part of this report:

1. Financial Statements.

(1) and (2). All Financial Statements and Financial Statement Schedules filed as part of this annual report are included in Part II, Item 8—”Financial Statements and Supplementary Data” of this annual report and reference is made thereto.

(3) The list of exhibits filed with this annual report is set forth in response to Item 15(b).

(b) Exhibits. The following documents are filed or incorporated by references as exhibits to this report:

Exhibit Item |  | Number and Description |  | Incorporated by Reference |  | Filed Herewith
3.1.1. |  | Articles Supplementary of Global Self Storage, Inc. (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 20, 2017 and incorporated herein by reference) |  | X |  |
3.1.2. |  | Articles of Amendment and Restatement of Global Self Storage, Inc. (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on October 20, 2017 and incorporated herein by reference) |  | X |  |
3.2. |  | Second Amended and Restated Bylaws of Global Self Storage, Inc. (filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on October 20, 2017 and incorporated herein by reference) |  | X |  |
4.1 |  | Rights Agreement (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 2, 2016 and incorporated herein by reference) |  | X |  |
4.2 |  | First Amendment, dated October 20, 2017, to Rights Agreement, dated as of January 29, 2016, between Global Self Storage, Inc. and American Stock Transfer & Trust Company, LLC (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 20, 2017 and incorporated herein by reference) |  | X |  |
4.3 |  | Form of Registration Rights Agreement by and between the Company and Tuxis (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 30, 2016 and incorporated herein by reference) |  | X |  |
4.4 |  | Description of Securities of Global Self Storage, Inc. |  |  |  | X
10.1 |  | Guaranty dated June 24, 2016 by Global Self Storage, Inc. in favor of Insurance Strategy Funding IV, LLC (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 30, 2016 and incorporated herein by reference) |  | X |  |
10.2 |  | Loan Agreement dated June 24, 2016 between certain subsidiaries of Global Self Storage, Inc. and Insurance Strategy Funding IV, LLC (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 30, 2016 and incorporated herein by reference) |  | X |  |

49

Exhibit Item |  | Number and Description |  | Incorporated by Reference |  | Filed Herewith
10.3 |  | Promissory Note dated June 24, 2016 between certain subsidiaries of Global Self Storage, Inc. and Insurance Strategy Funding IV, LLC (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on June 30, 2016 and incorporated herein by reference) |  | X |  |
10.4 |  | Form of Mortgage, Assignment of Leases and Rents and Security Agreement (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on June 30, 2016 and incorporated herein by reference) |  | X |  |
10.5 |  | Employment Agreement between Mark C. Winmill and the Company dated March 29, 2018 (filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K filed on April 2, 2018 and incorporated herein by reference) |  | X |  |
10.6 |  | Global Self Storage, Inc. 2017 Equity Incentive Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 20, 2017 and incorporated herein by reference) |  | X |  |
10.7 |  | Form of Restricted Share Award Agreement (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed on March 28, 2018 and incorporated herein by reference) |  | X |  |
10.8 |  | Form of Performance Share Award Agreement (filed as Exhibit 4.3 to the Company’s Registration Statement on Form S-8 filed on March 28, 2018 and incorporated herein by reference) |  | X |  |
10.9 |  | Loan Agreement dated December 20, 2018 between certain subsidiaries of Global Self Storage, Inc. and TCF National Bank (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 21, 2018 and incorporated herein by reference) |  | X |  |
10.10 |  | Guaranty dated December 20, 2018 by Global Self Storage, Inc. in favor of TCF National Bank (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 21, 2018 and incorporated herein by reference) |  | X |  |
21.1 |  | Subsidiaries of the Company |  |  |  | X
23.1 |  | Consent of Tait, Weller & Baker LLP for Global Self Storage, Inc. |  |  |  | X
23.2 |  | Consent of RSM US LLP for Global Self Storage, Inc. |  |  |  | X
24.1 |  | Powers of Attorney (included as part of the signature pages hereto) |  |  |  |
31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  | X
31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  | X
32.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  | X

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Exhibit Item |  | Number and Description |  | Incorporated by Reference |  | Filed Herewith
32.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  | X
101. |  | The following materials from Global Self Storage, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019, are formatted in Inline XBRL (eXtensible Business Reporting Language): (1) consolidated balance sheets; (2) consolidated statements of operations; (3) consolidated statements of comprehensive income (loss); (4) consolidated statement of changes in equity; (5) consolidated statements of cash flows; (6) notes to consolidated financial statements; and (7) financial statement schedule III. |  |  |  | X
104 |  | The cover page from this annual report for the year ended December 31, 2019, formatted in Inline XBRL (and contained in Exhibit 101) |  |  |  | X

51

Item 16. | Form 10-K S ummary.

Not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|  | GLOBAL SELF STORAGE, INC.
Date: March 30, 2020 |  | /s/ Mark C. Winmill
|  | By: Mark C. Winmill Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark C. Winmill, Donald Klimoski II, and Russell Kamerman, and each of them, with full power to act without the other, such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Form 10-K and any and all amendments thereto, and to file the same, with exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: March 30, 2020 |  | /s/ Mark C. Winmill
|  | By: Mark C. Winmill
|  | Chief Executive Officer, President and Chairman of the Board of Directors (Principal Executive Officer)
Date: March 30, 2020 |  | /s/ Thomas O’Malley
|  | By: Thomas O’Malley
|  | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
Date: March 30, 2020 |  | /s/ Thomas B. Winmill
|  | By: Thomas B. Winmill
|  | Director
Date: March 30, 2020 |  | /s/ Russell E. Burke III
|  | By: Russell E. Burke III
|  | Director
Date: March 30, 2020 |  | /s/ George B. Langa
|  | By: George B. Langa
|  | Director

52

Date: March 30, 2020 |  | /s/ William C. Zachary
|  | By: William C. Zachary
|  | Director

53

Global Self Storage, Inc.

Financial Statements`

Table of Contents

Reports of Independent Registered Public Accounting Firm |  | F-2
Consolidated Balance Sheets as of December 31, 2019 and 2018 |  | F-4
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2019 and 2018 |  | F-5
Consolidated Statement of Stockholders’ Equity |  | F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018 |  | F-7
Notes to consolidated financial statements |  | F-8

F-1

Report of Independent Regist ered Public Accounting Firm

To the Stockholders and the Board of Directors of Global Self Storage, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Global Self Storage, Inc. and subsidiaries (the Company) as of December 31, 2019, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for the year then ended, and the related notes and schedule (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ RSM US LLP

We have served as the Company's auditor since 2019.

Stamford, Connecticut

March 30, 2020

F-2

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Global Self Storage, Inc.

New York, New York

Opinion on the Financial Statements

We have audited the consolidated balance sheet of Global Self Storage, Inc. (the “Company”) as of December 31, 2018, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the year then ended, and the related notes and financial statement Schedule III (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2018, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We served as the Company’s auditor from 1974 through 2018.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

TAIT, WELLER & BAKER LLP

Philadelphia, Pennsylvania

April 1, 2019

F-3

GLOBAL SELF STORAG E, INC.

CONSOLIDATED BALANCE SHEETS

|  | December 31, 2019 |  |  | December 31, 2018 |
Assets |  |  |  |  |  |  |  |
Real estate assets, net |  | $ | 59,752,153 |  |  | $ | 53,811,737 |
Cash and cash equivalents |  |  | 3,990,160 |  |  |  | 1,526,203 |
Restricted cash |  |  | 263,405 |  |  |  | 186,063 |
Investments in securities |  |  | 1,761,312 |  |  |  | 1,567,607 |
Accounts receivable |  |  | 164,078 |  |  |  | 67,604 |
Prepaid expenses and other assets |  |  | 325,450 |  |  |  | 263,767 |
Line of credit issuance costs, net |  |  | 311,869 |  |  |  | 471,196 |
Intangible assets, net |  |  | 398,795 |  |  |  | — |
Goodwill |  |  | 694,121 |  |  |  | 694,121 |
Total assets |  | $ | 67,661,343 |  |  | $ | 58,588,298 |
Liabilities and equity |  |  |  |  |  |  |  |
Note payable, net |  | $ | 18,839,787 |  |  | $ | 19,269,250 |
Line of credit borrowing |  |  | 4,914,000 |  |  |  | — |
Accounts payable and accrued expenses |  |  | 1,841,640 |  |  |  | 2,113,172 |
Total liabilities |  |  | 25,595,427 |  |  |  | 21,382,422 |
Commitments and contingencies |  |  |  |  |  |  |  |
Equity |  |  |  |  |  |  |  |
Preferred stock, $0.01 par value: 50,000,000 shares authorized, no shares outstanding |  |  | — |  |  |  | — |
Common stock, $0.01 par value: 450,000,000 shares authorized, 9,330,297 and 7,692,624 issued and outstanding at December 31, 2019 and 2018, respectively |  |  | 93,303 |  |  |  | 76,926 |
Additional paid in capital |  |  | 40,329,502 |  |  |  | 33,961,903 |
Accumulated comprehensive income |  |  | — |  |  |  | — |
Retained earnings |  |  | 1,643,111 |  |  |  | 3,167,047 |
Total equity |  |  | 42,065,916 |  |  |  | 37,205,876 |
Total liabilities and equity |  | $ | 67,661,343 |  |  | $ | 58,588,298 |

See notes to consolidated financial statements.

F-4

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

|  | Year Ended |  |  | Year Ended |
|  | December 31, 2019 |  |  | December 31, 2018 |
Revenues |  |  |  |  |  |  |  |
Rental income |  | $ | 8,371,292 |  |  | $ | 7,850,870 |
Other property related income |  |  | 283,570 |  |  |  | 260,109 |
Management fees and other income |  |  | 13,460 |  |  | — |
Total revenues |  |  | 8,668,322 |  |  |  | 8,110,979 |
Expenses |  |  |  |  |  |  |  |
Property operations |  |  | 3,577,358 |  |  |  | 3,262,603 |
General and administrative |  |  | 2,126,804 |  |  |  | 1,826,446 |
Depreciation and amortization |  |  | 1,438,908 |  |  |  | 1,398,358 |
Business development |  |  | 124,428 |  |  |  | 198,000 |
Total expenses |  |  | 7,267,498 |  |  |  | 6,685,407 |
Operating income |  |  | 1,400,824 |  |  |  | 1,425,572 |
Other income (expense) |  |  |  |  |  |  |  |
Dividend and interest income |  |  | 71,666 |  |  |  | 76,296 |
Unrealized gain on marketable equity securities |  |  | 193,705 |  |  |  | 15,517 |
Interest expense |  |  | (1,075,576 | ) |  |  | (897,937 | )
Total other income (expense), net |  |  | (810,205 | ) |  |  | (806,124 | )
Net income and comprehensive income |  | $ | 590,619 |  |  | $ | 619,448 |
Earnings per share |  |  |  |  |  |  |  |
Basic |  | $ | 0.08 |  |  | $ | 0.08 |
Diluted |  | $ | 0.08 |  |  | $ | 0.08 |
Weighted average shares outstanding |  |  |  |  |  |  |  |
Basic |  |  | 7,699,966 |  |  |  | 7,622,287 |
Diluted |  |  | 7,702,117 |  |  |  | 7,624,122 |

See notes to consolidated financial statements.

F-5

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

|  |  |  |  |  |  |  |  |  |  |  |  |  | Accumulated Other |  |  |  |  |  |  | Total |
|  | Common Stock |  |  | Paid in |  |  | Comprehensive |  |  | Retained |  |  | Stockholders' |
|  | Shares |  |  | Par Value |  |  | Capital |  |  | Income |  |  | Earnings |  |  | Equity |
Balance at December 31, 2017 |  |  | 7,619,469 |  |  | $ | 76,195 |  |  | $ | 33,881,863 |  |  | $ | 796,603 |  |  | $ | 3,746,323 |  |  | $ | 38,500,984 |
Adjustment from financial instruments update ASU 2016-01 |  | — |  |  | — |  |  | — |  |  |  | (796,603 | ) |  |  | 796,603 |  |  | — |
Restricted stock grants issued |  |  | 73,155 |  |  |  | 731 |  |  |  | (731 | ) |  | — |  |  | — |  |  | — |
Stock-based compensation |  | — |  |  | — |  |  |  | 80,771 |  |  | — |  |  | — |  |  |  | 80,771 |
Net income |  | — |  |  | — |  |  | — |  |  | — |  |  |  | 619,448 |  |  |  | 619,448 |
Dividends |  | — |  |  | — |  |  | — |  |  | — |  |  |  | (1,995,327 | ) |  |  | (1,995,327 | )
Balance at December 31, 2018 |  |  | 7,692,624 |  |  |  | 76,926 |  |  |  | 33,961,903 |  |  |  | - |  |  |  | 3,167,047 |  |  |  | 37,205,876 |
Restricted stock grants issued |  |  | 41,343 |  |  |  | 414 |  |  |  | (414 | ) |  | — |  |  | — |  |  | — |
Restricted stock grant forfeitures |  |  | (4,961 | ) |  |  | (50 | ) |  |  | 50 |  |  | — |  |  | — |  |  | — |
Issuance of common stock under rights offering, net of expenses |  |  | 1,601,291 |  |  |  | 16,013 |  |  |  | 6,264,974 |  |  | — |  |  | — |  |  |  | 6,280,987 |
Stock-based compensation |  | — |  |  | — |  |  |  | 102,989 |  |  | — |  |  | — |  |  |  | 102,989 |
Net income |  | — |  |  | — |  |  | — |  |  | — |  |  |  | 590,619 |  |  |  | 590,619 |
Dividends |  | — |  |  | — |  |  | — |  |  | — |  |  |  | (2,114,555 | ) |  |  | (2,114,555 | )
Balance at December 31, 2019 |  |  | 9,330,297 |  |  | $ | 93,303 |  |  | $ | 40,329,502 |  |  | $ | — |  |  | $ | 1,643,111 |  |  | $ | 42,065,916 |

See notes to consolidated financial statements.

F-6

GLOBAL SELF STORAGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

|  | Year Ended |  |  | Year Ended |
|  | December 31, 2019 |  |  | December 31, 2018 |
Cash flows from operating activities |  |  |  |  |  |  |  |
Net income |  | $ | 590,619 |  |  | $ | 619,448 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,438,908 |  |  |  | 1,398,358 |
Unrealized gain on marketable equity securities |  |  | (193,705 | ) |  |  | (15,517 | )
Amortization of loan procurement costs |  |  | 200,819 |  |  |  | 49,118 |
Stock-based compensation |  |  | 102,989 |  |  |  | 80,771 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | (96,474 | ) |  |  | 35,685 |
Prepaid expenses and other assets |  |  | (37,436 | ) |  |  | (41,937 | )
Accounts payable and accrued expenses |  |  | (298,390 | ) |  |  | 155,323 |
Net cash provided by operating activities |  |  | 1,707,330 |  |  |  | 2,281,249 |
Cash flows from investing activities |  |  |  |  |  |  |  |
Acquisition of self storage properties |  |  | (6,287,082 | ) |  |  | — |
Construction |  |  | (1,437,419 | ) |  |  | (70,703 | )
Improvements and equipment additions |  |  | (58,186 | ) |  |  | (93,829 | )
Net cash used in investing activities |  |  | (7,782,687 | ) |  |  | (164,532 | )
Cash flows from financing activities |  |  |  |  |  |  |  |
Issuance of common stock under rights offering, net of expenses |  |  | 6,280,987 |  |  |  | — |
Line of credit borrowing |  |  | 4,914,000 |  |  |  | — |
Principal payments on note payable |  |  | (470,955 | ) |  |  | (190,488 | )
Line of credit issuance costs |  |  | — |  |  |  | (477,981 | )
Dividends paid |  |  | (2,107,376 | ) |  |  | (1,992,397 | )
Net cash provided by (used in) financing activities |  |  | 8,616,656 |  |  |  | (2,660,866 | )
Net increase (decrease) in cash and cash equivalents |  |  | 2,541,299 |  |  |  | (544,149 | )
Cash, cash equivalents, and restricted cash, beginning of period |  |  | 1,712,266 |  |  |  | 2,256,415 |
Cash, cash equivalents, and restricted cash, end of period |  | $ | 4,253,565 |  |  | $ | 1,712,266 |
Supplemental cash flow and noncash information |  |  |  |  |  |  |  |
Cash paid for interest |  | $ | 821,434 |  |  | $ | 837,074 |
Supplemental disclosure of noncash activities: |  |  |  |  |  |  |  |
Dividends accrued on restricted stock awards |  | $ | 7,179 |  |  | $ | 2,930 |

See notes to consolidated financial statements.

F-7

GLOBAL SELF STORAGE, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Global Self Storage, Inc. (the “Company,” “we,” “our,” “us”) is a self-administered and self-managed Maryland real estate investment trust (“REIT”) that owns, operates, manages, acquires, develops and redevelops self storage properties (“stores” or “properties”) in the United States. Through its wholly owned subsidiaries, the Company owns and/or manages 13 self-storage properties in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma. The Company operates primarily in one segment: rental operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Upon deregistration as an investment company, effective January 19, 2016, the Company’s status changed to an operating company from an investment company since it no longer met the assessment of an investment company under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 (“ASC 946”). The Company discontinued applying the guidance in ASC 946 and began to account for the change in status prospectively by accounting for its investments in accordance with other U.S. generally accepted accounting principles (“GAAP”) topics as of the date of the change in status.

The consolidated financial statements of the Company are presented on the accrual basis of accounting in accordance with GAAP and include the accounts of the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain amounts from the prior year have been reclassified to conform to current year presentation as described below.

Accounting Standards Adopted

In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02 - Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either financing or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less are accounted for similar to previous guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to previous guidance for sales-type leases, direct financing leases and operating leases. The Company adopted the standard on January 1, 2019, the date it became effective for public companies, using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to retained earnings as of January 1, 2019 as a result of this adoption. Upon adoption, the Company elected the package of practical expedients permitted within the standard, which among other things, allows for the carryforward of historical lease classification. The Company also elected the practical expedient provided to lessors in a subsequent amendment to the standard that removed the requirement to separate lease and nonlease components, provided certain conditions were met. Refer to note 9 for the impact of the adoption of ASU No. 2016-02 – Leases (Topic 842) on the Company’s consolidated financial statements.

Cash, Cash Equivalents, and Restricted Cash

The Company’s cash is deposited with financial institutions located throughout the United States and at times may exceed federally insured limits. The Company considers all highly liquid investments, which may include

F-8

money market fund shares, with a maturity of three months or less to be cash equivalents. Restricted cash is comprised of escrowed funds deposited with a bank relating to capital expenditures.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash in our consolidated balance sheets to the total amount shown in our consolidated statements of cash flows:

|  | December 31, 2019 |  |  | December 31, 2018 |
Cash and cash equivalents |  | $ | 3,990,160 |  |  | $ | 1,526,203 |
Restricted cash |  |  | 263,405 |  |  |  | 186,063 |
Total cash, cash equivalents, and restricted cash as shown in our consolidated statements of cash flows |  | $ | 4,253,565 |  |  | $ | 1,712,266 |

Income Taxes

The Company has elected to be treated as a REIT under the IRC. In order to maintain its qualification as a REIT, among other things, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income tax with respect to that portion of its income which meets certain criteria and is distributed annually to stockholders. The Company plans to continue to operate so that it meets the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. If the Company were to fail to meet these requirements, it would be subject to federal income tax. In managements opinion, the requirements to maintain these elections are being met. The Company is subject to certain state and local taxes.

The Company has elected to treat its corporate subsidiary, SSG TRS LLC, as a taxable REIT subsidiary (“TRS”). In general, the Company’s TRS may perform additional services for tenants and may engage in any real estate or non-real estate related business. A TRS is subject to federal corporate income tax.

The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Company has reviewed its tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on federal, state, and local income tax returns for open tax years (2016 – 2018), or is expected to be taken in the Company’s 2019 tax returns.

Marketable Equity Securities

Investments in equity securities that have readily determinable fair values are accounted for equity securities measured at fair value. Gains or losses from changes in the fair value of equity securities are recorded in net income, until the investment is sold or otherwise disposed. The specific identification method is used to determine the realized gain or loss on investments sold or otherwise disposed.

Fair value is determined using a valuation hierarchy generally by reference to an active trading market, using quoted closing or bid prices. Judgment is used to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive.

Real Estate Assets

Real estate assets are carried at the appreciated value as of January 19, 2016, the effective date of the change in status to an operating company, less accumulated depreciation from that date. Purchases subsequent to the effective date of the change in status are carried at cost, less accumulated depreciation and impairment losses. Direct and allowable internal costs associated with the development, construction, renovation, and improvement of real estate assets are capitalized. Property taxes and other costs associated with development incurred during the construction period are capitalized. The construction period begins when expenditures for the real estate assets have been made and activities that are necessary to prepare the asset for its intended use are in progress. The construction period ends when the asset is substantially complete and ready for its intended use.

Acquisition costs are accounted for in accordance with Accounting Standard Update (“ASU”) No. 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business, which was adopted on January 1, 2018

F-9

and are generally capitalized. When stores are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values. Allocations to land, building and improvements, and equipment are recorded based upon their respective fair values as est imated by management.

In allocating the purchase price for an acquisition, the Company determines whether the acquisition includes intangible assets or liabilities. The Company allocates a portion of the purchase price to an intangible asset attributed to the value of in-place leases. This intangible is generally amortized to expense over the expected remaining term of the respective leases. Substantially all of the leases in place at acquired stores are at market rates, as the majority of the leases are month-to-month contracts.

Internal transaction costs associated with acquisitions or dispositions of real estate, as well as repairs and maintenance costs, are charged to expense as incurred. Major replacements and betterments that improve or extend the life of the asset are capitalized and depreciated over their estimated useful lives. Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and improvements, which are generally between 5 and 39 years.

Derivative Financial Instruments

The Company carries all derivative financial instruments on the balance sheet at fair value. Fair value of derivatives is determined by reference to observable prices that are based on inputs not quoted on active markets, but corroborated by market data. The accounting for changes in the fair value of a derivative instrument depends on whether the derivative has been designated and qualifies as part of a hedging relationship. The Company’s use of derivative instruments has been limited to an interest rate cap agreement. The fair values of derivative instruments are included in prepaid expenses and other assets in the accompanying balance sheets. For derivative instruments not designated as cash flow hedges, the unrealized gains and losses are included in interest expense in the accompanying statements of operations. For derivatives designated as cash flow hedges, the effective portion of the changes in the fair value of the derivatives is initially reported in accumulated other comprehensive income (loss) in the Company’s balance sheets and subsequently reclassified into earnings when the hedged transaction affects earnings. The valuation analysis of the interest rate cap reflects the contractual terms of derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses primarily consist of property tax accruals, unearned rental income, and trade payables.

Revenue and Expense Recognition

Revenues from stores, which are primarily composed of rental income earned pursuant to month-to-month leases for storage space, as well as associated late charges and administrative fees, are recognized as earned in accordance with ASU Leases-Topic 842. Promotional discounts reduce rental income over the promotional period. Ancillary revenues from sales of merchandise and tenant insurance and other income are recognized when earned.

The Company's management fees are earned subject to the terms of the related property management services agreements (“PSAs”). These PSAs provide that the Company will perform management services, which include leasing and operating the property and providing accounting, marketing, banking, maintenance and other services. These services are provided in exchange for monthly management fees, which are based on a percentage of revenues collected from stores owned by third parties. PSAs generally have original terms of three years, after which management services are provided on a month-to-month basis unless terminated. Management fees are due on the last day of each calendar month that management services are provided.

The Company accounts for the management services provided to a customer as a single performance obligation which are rendered over time each month in accordance with ASU Contracts with Customers-Topic 606. The total amount of consideration from the contract is variable as it is based on monthly revenues, which are influenced by multiple factors, some of which are outside the Company's control. Therefore, the Company recognizes the revenue at the end of each month once the uncertainty is resolved. No disaggregated information relating to PSAs is presented as there is only one contract for the year ended December 31, 2019.

F-10

The Company accrues for property tax expense based upon actual amounts billed and, in some circumstances, estimates and historical trends when bills or assessments have not been received from the taxing authorities o r such bills and assessments are in dispute. Cost of operations and general and administrative expense are expensed as incurred.

Credit Risk

Financial assets that are exposed to credit risk consist primarily of cash and cash equivalents and certain portions of accounts receivable including rents receivable from our tenants. Cash and cash equivalents are on deposit with highly rated commercial banks.

Evaluation of Asset Impairment

The Company evaluates its real estate assets, intangible assets consisting of in-place lease, and goodwill for impairment annually. If there are indicators of impairment and we determine that the asset is not recoverable from future undiscounted cash flows to be received through the asset’s remaining life (or, if earlier, the expected disposal date), we record an impairment charge to the extent the carrying amount exceeds the asset’s estimated fair value or net proceeds from expected disposal.

The Company evaluates goodwill for impairment annually and whenever relevant events, circumstances, and other related factors indicate that fair value may be less that carrying amounts. If it is determined that the carrying amount of goodwill exceeds the amount that would be allocated to goodwill if the reporting unit were acquired for estimated fair value, an impairment charge is recorded. There were no indicators of impairment and no impairment charges were recorded during 2019 or 2018.

Stock-based Compensation

The measurement and recognition of compensation expense for all stock-based payment awards to employees are based on estimated fair values. Awards granted are valued at fair value and any compensation expense is recognized over the service periods of each award. For awards granted which contain a graded vesting schedule and the only condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. For awards granted for which vesting is subject to a performance condition, compensation cost is recognized over the requisite service period if and when the Company concludes it is probable that the performance condition will be achieved.

Loan Procurement Costs

Loan procurement costs, net are presented as a direct deduction from the carrying amount of the related debt liability. If there is not an associated debt liability recorded on the consolidated balance sheets, the costs are recorded as an asset net of accumulated amortization. Loan procurement costs associated with the Company's revolving credit facility remain in Line of credit issuance costs, net of amortization on the Company's consolidated balance sheets. The costs are amortized over the estimated life of the related debt.

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from management’s estimates.

F-11

Recently Issued Accounting Standards

In August 2017, the FASB issued ASU No. 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The standard became effective on January 1, 2020 and is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13 – Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new guidance changes how entities measure credit losses for most financial assets. This standard requires an entity to estimate its lifetime expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU No. 2018-19 – Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarifies that receivables arising from operating leases are within the scope of the leasing standard (ASU No. 2016-02), and not within the scope of ASU No. 2016-13. The standard became effective on January 1, 2020 and is not expected to have a material impact on the Company’s consolidated financial statements.

3. REAL ESTATE ASSETS

The carry value of the Company’s real estate assets is summarized as follows:

|  | December 31, 2019 |  |  | December 31, 2018 |
Land |  | $ | 6,122,065 |  |  | $ | 5,493,814 |
Buildings, improvements, and equipment |  |  | 57,178,338 |  |  |  | 51,879,327 |
Construction in progress |  |  | 1,532,235 |  |  |  | 94,816 |
Self storage properties |  |  | 64,832,638 |  |  |  | 57,467,957 |
Less: Accumulated depreciation |  |  | (5,080,485 | ) |  |  | (3,656,220 | )
Real estate assets, net |  | $ | 59,752,153 |  |  | $ | 53,811,737 |

In 2019, the Company broke ground on the Millbrook, NY expansion, which, upon completion in February 2020, added approximately 16,500 of gross square feet of all-climate-controlled units. There is no guarantee that we will experience demand for the newly added expansion or that we will be able to successfully lease-up the expansion to the occupancy level of our other properties. As of December 31, 2019, development costs for this project have been capitalized and are reflected in real estate assets, net on the Company’s consolidated balance sheets. Construction of the expansion was completed in the first quarter of 2020.

4. ACQUISITIONS

In November 2019 the Company acquired a self storage property. The acquisition of the property was accounted for as an asset acquisition. The cost of the property, including closing costs, was assigned to land, buildings, equipment, and in-place customer leases based on their relative fair values.

The purchase price of the property acquired in 2019 has been assigned as follows:

|  |  |  |  |  |  |  |  |  | Consideration Paid |  |  | Acquisition Date Fair Value |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Net Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Assumed |  |  |  |  |  |  |  |  |  |  | In-Place |  |  | Closing |
|  | Number of |  | Date of |  | Purchase |  |  |  |  |  |  | (Assets |  |  |  |  |  |  | Building and |  |  | Customer |  |  | Costs |
State |  | Properties |  | Acquisition |  | Price |  |  | Cash Paid |  |  | Acquired) |  |  | Land |  |  | Equipment |  |  | Leases |  |  | Expensed |
NY |  | 1 |  | 11/19/2019 |  | $ | 6,282,514 |  |  | $ | 6,287,082 |  |  | $ | (4,568 | ) |  | $ | 628,251 |  |  | $ | 5,240,825 |  |  | $ | 413,438 |  |  | $ | — |
Total |  |  |  |  |  | $ | 6,282,514 |  |  | $ | 6,287,082 |  |  | $ | (4,568 | ) |  | $ | 628,251 |  |  | $ | 5,240,825 |  |  | $ | 413,438 |  |  | $ | — |

F-12

The Company measures the fair value of in-place customer lease intangible assets based on the Company’s experience with customer turnover and the estimated cost to replace the in-place leases. The Company amortizes in-place customer leases on a straight-li ne basis over 1 2 months (the estimated future benefit period). Amortization expense related to in-place customer leases was $14,643 and $0 for the years ended December 31, 2019 and 2018, respectively.

The following table summarizes the Company’s revenue and earnings associated with the 2019 acquisition from the acquisition date, that are included in the consolidated statements of operations for the year ended December 31, 2019:

|  | Year Ended |
|  | December 31, 2019 |
Total revenue |  | $ | 60,244 |
Net loss |  |  | (7,484 | )

5. MARKETABLE EQUITY SECURITIES

Investments in marketable equity securities consisted of the following:

|  |  |  |  |  | Gross Unrealized |  |  |  |  |
December 31, 2019 |  | Cost Basis |  |  | Gains |  |  | Losses |  |  | Value |
Investment in marketable equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stocks |  | $ | 755,487 |  |  | $ | 1,005,825 |  |  | $ | — |  |  | $ | 1,761,312 |
Total investment in marketable equity securities |  | $ | 755,487 |  |  | $ | 1,005,825 |  |  | $ | — |  |  | $ | 1,761,312 |
|  |  |  |  |  | Gross Unrealized |  |  |  |  |
December 31, 2018 |  | Cost Basis |  |  | Gains |  |  | Losses |  |  | Value |
Investment in marketable equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stocks |  | $ | 755,487 |  |  | $ | 812,120 |  |  | $ | — |  |  | $ | 1,567,607 |
Total investment in marketable equity securities |  | $ | 755,487 |  |  | $ | 812,120 |  |  | $ | — |  |  | $ | 1,567,607 |

6. FAIR VALUE MEASUREMENTS

The use of fair value to measure the financial instruments held by the Company and its subsidiaries is fundamental to its consolidated financial statements and is a critical accounting estimate because a substantial portion of its assets and liabilities are recorded at estimated fair value. The application of fair value measurements may be on a recurring or nonrecurring basis depending on the accounting principles applicable to the specific asset or liability or whether management has elected to carry the item at its estimated fair value.

The hierarchy of valuation techniques is based on whether the inputs to those techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 — Quoted prices in active markets for identical instruments or liabilities.

Level 2 — Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing an asset or liability and are developed based on market data obtained from sources independent of the Company. These may include quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk, and market-corroborated inputs.

Level 3 — Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Company’s own assumptions about the factors that market participants use in pricing an asset or liability and are based on the best information available in the circumstances.

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This hierarchy requires the Company to use observable market data, w hen available, and to minimize the use of unobservable inputs when estimating fair value. The valuation method used to estimate fair value may produce a fair value measurement that may not be indicative of ultimate realizable value. Furthermore, while mana gement believes its valuation methods are appropriate and consistent with those used by other market participants, the use of different methods or assumptions to estimate the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Those estimated values may differ significantly from the values that would have been used had a readily available market for such loans or investments existed, or had such loans or investments been liquidated, and those differences could be material to the financial statements.

Fair valued assets consist of shares of equity securities and an interest rate cap. The value of the equity securities is based on a traded market price and is considered to be a level 1 measurement, and the value of the interest rate cap is based on its maturity, observable market-based inputs including interest rate curves and is considered to be a level 2 measurement.

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2019 and December 31, 2018:

December 31, 2019 |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Marketable equity securities |  | $ | 1,761,312 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,761,312 |
Interest rate cap |  | — |  |  |  | 51 |  |  | — |  |  |  | 51 |
Total assets at fair value |  | $ | 1,761,312 |  |  | $ | 51 |  |  | $ | — |  |  | $ | 1,761,363 |
December 31, 2018 |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Marketable equity securities |  | $ | 1,567,607 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,567,607 |
Interest rate cap |  | — |  |  |  | 4,889 |  |  | — |  |  |  | 4,889 |
Total assets at fair value |  | $ | 1,567,607 |  |  | $ | 4,889 |  |  | $ | — |  |  | $ | 1,572,496 |

There were no assets transferred from level 1 to level 2 as of December 31, 2019 or December 31, 2018. The Company did not have any assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of December 31, 2019 or December 31, 2018.

The fair values of financial instruments including cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximated their respective carrying values as of December 31, 2019 and 2018. The aggregate estimated fair value of the Company’s debt was $24,474,174 and $18,877,333 as of December 31, 2019 and 2018, respectively. These estimates were based on market interest rates for comparable obligations, general market conditions and maturity. The Company’s debt is classified as level 2 in the fair value hierarchy.

7. DERIVATIVES

The Company’s objective in using an interest rate derivative is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses an interest rate cap to manage interest rate risk. The Company carries the premium paid for the interest rate cap as an asset on the balance sheet at fair value. The change in the unrealized gain or loss of the premium is recorded as an increase or decrease to interest expense.

The following table summarizes the terms of the Company’s derivative financial instrument as of December 31, 2019:

|  | Notional Amount |  |  |  |  | Effective |  | Maturity
Product |  | December 31, 2019 |  |  | December 31, 2018 |  |  | Strike |  | Date |  | Date
Cap Agreement |  | $ | 7,500,000 |  |  | $ | 7,500,000 |  |  | 3.50 % - 4.00% |  | 12/24/2018 |  | 12/20/2021

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8. NOTE PAYABLE AND REVOLVING LINE OF CREDIT

Note Payable

On June 24, 2016, certain wholly owned subsidiaries (the “Secured Subsidiaries”) of the Company entered into a loan agreement (the “Loan Agreement”) borrowing the principal amount of $20 million pursuant to a promissory note (the “Promissory Note”). The Promissory Note bears an interest rate equal to 4.192% per annum and is due to mature on July 1, 2036. Pursuant to a security agreement (the “Security Agreement”), the obligations under the Loan Agreement are secured by certain real estate assets owned by the Secured Subsidiaries.

The Company entered into a non-recourse guaranty on June 24, 2016 (the “Guaranty,” and together with the Loan Agreement, the Promissory Note and the Security Agreement, the “Loan Documents”) to guarantee the payment to Lender of certain obligations of the Secured Subsidiaries under the Loan Agreement.

The Loan Documents require the Secured Subsidiaries and the Company to comply with certain covenants, including, among others, a minimum net worth test and other customary covenants. The Lender may accelerate amounts outstanding under the Loan Documents upon the occurrence of an Event of Default (as defined in the Loan Agreement) including, but not limited to, the failure to pay amounts due or commencement of bankruptcy proceedings. As of December 31, 2019 and 2018, the Company was in compliance with these covenants.

The Company incurred loan procurement costs of $646,246 and such costs have been recorded net of the note payable on the consolidated balance sheets. The costs are amortized over the term of the loan using the effective interest method and are recorded as an adjustment to interest expense. The Company recorded amortization expense of $41,492 and $42,333 for the years ended December 31, 2019 and 2018, respectively.

As of December 31, 2019 and 2018 the carrying value of the Company’s note payable is summarized as follows:

Note Payable |  | December 31, 2019 |  |  | December 31, 2018 |
Principal balance outstanding |  | $ | 19,338,556 |  |  | $ | 19,809,511 |
Less: Loan procurement costs, net |  |  | (498,769 | ) |  |  | (540,261 | )
Total note payable, net |  | $ | 18,839,787 |  |  | $ | 19,269,250 |

As of December 31, 2019, the note payable was secured by certain of its self storage properties with an aggregate net book value of approximately $34.6 million. The note payable paid interest only from August 1, 2016 through June 30, 2018. The following table represents the future principal payment requirements on the note payable as of December 31, 2019:

2020 |  | $ | 492,797 |
2021 |  |  | 513,857 |
2022 |  |  | 535,816 |
2023 |  |  | 558,714 |
2024 |  |  | 582,591 |
2025 and thereafter |  |  | 16,654,781 |
Total principal payments |  | $ | 19,338,556 |

Revolving Line of Credit

On December 20, 2018, certain wholly owned subsidiaries (the “Subsidiaries”) of the Company entered into a revolving credit loan agreement (the “Agreement”) between the Subsidiaries and TCF National Bank (the “Lender”). Under the Agreement, the Subsidiaries are borrowing from the Lender in the principal amount of up to

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$10 million pursuant to a promissory note (the “Note”). The Note bears an interest rate equal to 3.00% over the One Month U.S. Dollar London Inter-Bank Offered Rate and is du e to mature on December 20, 2021. The obligations under the Agreement are secured by certain real estate assets owned by the Subsidiaries.

The Company entered into a guaranty of payment on December 20, 2018 (the “Guaranty,” and together with the Agreement, the Note and related instruments, the “Revolver”) to guarantee the payment to Lender of certain obligations of the Subsidiaries under the Agreement.

The Revolver requires the Subsidiaries and the Company to comply with certain covenants, including, among others, customary financial covenants. The Lender may accelerate amounts outstanding under the Loan Documents upon the occurrence of an Event of Default (as defined in the Agreement) including, but not limited to, the failure to pay amounts due to the Lender or commencement of bankruptcy proceedings.

The Company incurred issuance costs of $477,981 and such costs are amortized as an adjustment to interest expense over the term of the loan. The Company recorded amortization expense of $159,327 and $6,785 for the years ended December 31, 2019 and 2018, respectively. The outstanding loan balance under the Revolver was $4,914,000 and $0 as of December 31, 2019 and 2018, respectively.

9. LEASES

Global Self Storage as Lessor

The Company's property rental revenue is primarily related to rents received from tenants at its operating stores. The Company's leases with its self storage tenants are generally on month-to-month terms, include automatic monthly renewals, allow flexibility to increase rental rates over time as market conditions permit, and provide for the collection of contingent fees such as late fees. These leases do not include any terms or conditions that allow the tenants to purchase the leased space. All self-storage leases for which the Company acts as lessor have been classified as operating leases. The real estate assets related to the Company's stores are included in "Real estate assets, net" on the Company's consolidated balance sheets and are presented at historical cost less accumulated depreciation and impairment, if any. Rental income related to these operating leases is included in Property rental revenue on the Company's consolidated statements of operations, and is recognized each month during the month-to-month terms at the rental rate in place during each month.

Global Self Storage as Lessee

The Company is a lessee in a lease agreement for an automobile entered into November 2019 with a lease term of 3 years. The lease agreement does not contain any material residual value guarantees or material restrictive covenants. As a result of the Company’s election of the package of practical expedients permitted within ASC 842, which among other things, allows for the carryforward of historical lease classification, all of the Company’s lease agreements have been classified as operating leases. Lease expense for payments related to the Company’s operating leases is recognized on a straight-line basis over the lease term.

Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments as specified in the lease. Right-of-use assets and lease liabilities related to the Company’s operating leases are recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available surrounding the Company’s secured borrowing rates and implied secured spread at the lease commencement date in determining the present value of lease payments. The right-of-use asset also includes any lease payments made at or before lease commencement less any lease incentives. Upon adoption of ASC 842 on January 1, 2019, the Company had no right-of-use assets and lease liabilities related to its operating leases. As of December 31, 2019, the Company had right-of-use assets and lease liabilities related to its operating leases of $37,700 and $37,700, which are included in Other assets, net and Accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets, respectively. As of December 31, 2019, the Company’s weighted average remaining lease term and weighted average discount rate related to its operating leases were approximately 3 years and 4.78%, respectively.

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The future minimum lease payments under the automobile lease are $14,254, $14,254, and $11,878 for the years ending December 31, 2020, 2021, and 2022, respectively.

10. EARNINGS PER SHARE

Basic earnings per share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributed to potentially diluted securities. The following table sets forth the computation of basic and diluted earnings per share:

|  | For the Year Ended December 31, |
|  | 2019 |  |  | 2018 |
Net income |  | $ | 590,619 |  |  | $ | 619,448 |
Weighted average common shares outstanding: |  |  |  |  |  |  |  |
Average number of common shares outstanding - basic |  |  | 7,699,966 |  |  |  | 7,622,287 |
Net effect of dilutive unvested restricted stock awards included for treasury stock method |  |  | 2,151 |  |  |  | 1,835 |
Average number of common shares outstanding - diluted |  |  | 7,702,117 |  |  |  | 7,624,122 |
Earnings per common share |  |  |  |  |  |  |  |
Basic |  | $ | 0.08 |  |  | $ | 0.08 |
Diluted |  | $ | 0.08 |  |  | $ | 0.08 |

Common stock dividends paid in cash totaled $2,107,376 ($0.26 per share) and $1,992,397 ($0.26 per share) for the years ended December 31, 2019 and 2018, respectively.

11. RELATED PARTY TRANSACTIONS

Certain officers and directors of the Company also serve as officers and directors of Winmill & Co. Incorporated (“Winco”), Bexil, Tuxis, and their affiliates (collectively with the Company, the “Affiliates”). As of December 31, 2019, certain of the Affiliates owned approximately 5% of the Company’s outstanding common stock. Pursuant to an arrangement between a professional employer organization (“PEO”) and the Affiliates, the PEO provides payroll, benefits, compliance, and related services for employees of the Affiliates in accordance with applicable rules and regulations under the IRC and, in connection therewith, Midas Management Corporation (“MMC”), a subsidiary of Winco, acts as a conduit payer of compensation and benefits to the Affiliates’ employees including those who are concurrently employed by the Company and its Affiliates. Rent expense of concurrently used office space and overhead expenses for various concurrently used administrative and support functions incurred by the Affiliates are allocated at cost among them. The Affiliates participate in a 401(k) retirement savings plan for substantially all qualified employees. A matching expense based upon a percentage of contributions to the plan by eligible employees is incurred and allocated among the Affiliates. The matching expense is accrued and funded on a current basis and may not exceed the amount permitted as a deductible expense under the IRC. The aggregate rent and overhead accrued and paid by the Company to Winco for the years ended December 31, 2019 and 2018 was $77,850 and $53,969, respectively. The Company had reimbursements payable to MMC and Winco for compensation and benefits and rent and overhead of $19,096 and $20,885 as of December 31, 2019 and 2018, respectively.

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The Company currently reimburses monthly automobile expenses of $1,000 per month to its President, Mark C. Winmill. To the extent that the monthly payment under the Company’s automobile lease exceeds the current monthly reimbursement amount, Mr. Winmill voluntarily reimburses the Company for the excess amount. In this regard, Mr. Winmill has reimbursed the Company $3,2 28 and $3,228 for the years ended December 31, 2019 and 2018, respectively.

The Company leases office space and storage to certain Affiliates under a rental agreement. The terms of occupancy are month to month and automatically renew unless terminated by either party on ten days’ written notice. The Company earned rental income of $9,204 and $9,204 for the years ended December 31, 2019 and 2018, respectively.

In December 2019, the Company paid Tuxis $900,000 in connection with the purchase of a property made in 2016.

12. CAPITAL STOCK

As of December 31, 2019, the Company was authorized to issue 450,000,000 shares of $0.01 par value common stock of which 9,330,297 had been issued and was outstanding. The Company was also authorized to issue 50,000,000 shares of preferred stock, $0.01 par value, authorized, of which none has been issued.

On November 18, 2019, the Company commenced a rights offering to eligible common stockholders of the Company for the purchase of up to approximately $11.6 million of newly issued shares of the Company’s common stock. The rights offering concluded on December 13, 2019, with the Company raising $6,280,987, net of offering costs, from the sale of 1,601,291 shares at $4.18 per share.

13. STOCK-BASED COMPENSATION

On October 16, 2017 (“Effective Date”), the Company’s stockholders approved the Company’s 2017 Equity Incentive Plan (the “Plan”). The Plan is designed to provide equity-based incentives to certain eligible persons, as defined in the Plan, in the form of options, share appreciation rights, restricted stock, restricted stock units, dividend equivalent rights or other forms of equity-based compensation as determined in the discretion of the Board of Directors, the Compensation Committee of the Board of Directors, or other designee thereof. The total number of shares of common stock reserved and available for issuance under the Plan on the Effective Date was 760,000.

The Company approved restricted stock awards under the Plan to certain of its officers and employees during 2019 in the aggregate amount of 28,755 shares, of which 13,730 shares are time-based grants and 15,025 shares are performance-based grants. During 2018, the Company approved restricted stock awards under the Plan of 73,155 shares, of which 58,130 shares are time-based grants and 15,025 shares are performance-based grants. The Company recorded $102,990 and $80,771 of expense in general and administrative expense in its statement of operations related to restricted stock awards for the years ended December 31, 2019 and 2018, respectively. At December 31, 2019, there was $171,556 and $116,464 of unrecognized compensation expense related to unvested time-based and performance-based restricted stock awards, respectively. That cost is expected to be recognized over a weighted—average period of 2.44 years and 2.66 years for time-based and performance-based awards, respectively. The fair value of common stock awards is determined based on the closing trading price of the Company’s common stock on the grant date.

Time-Based Restricted Stock Grants

These time-based grants vest solely based on continued employment, with 6.25% of the shares eligible to vest on each three-month anniversary of the grant date during the four-year vesting period. Time-based restricted stock cannot be transferred during the vesting period. Grants of time-based restricted stock entitle the holder to dividends paid by the Company on shares of its common stock.

A summary of the Company’s time-based restricted stock grant activity is as follows:

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|  |  |  |  |  | Weighted-Average |
|  |  |  |  |  | Grant-Date |
Time-Based Restricted Stock Grants |  | Stock |  |  | Fair Value |
Unvested at December 31, 2018 |  |  | 47,228 |  |  | $ | 4.42 |
Granted |  |  | 13,730 |  |  | $ | 3.94 |
Vested |  |  | (16,065 | ) |  | $ | 4.36 |
Forfeited |  |  | (4,961 | ) |  | $ | 4.15 |
Unvested at December 31, 2019 |  |  | 39,932 |  |  | $ | 4.31 |

Performance-Based Restricted Stock Grants

Performance-based restricted stock grants vest based on continued employment and the achievement of certain Funds from Operations, as adjusted (“AFFO”) and same store revenue growth (“SSRG”) goals by the Company during 2019. Between 0% and 200% of these shares will be earned based on achievement of the AFFO and SSRG goals in 2019, and the shares which are earned will remain subject to quarterly vesting during the remaining four-year time vesting period. Dividends paid by the Company prior to the determination of how many shares are earned will be retained by the Company and released only with respect to earned shares. If a Change in Control (as defined in the Plan) occurs during 2019, the number of shares earned will equal the greater of the number of shares granted and the number of shares which would have been earned based on the AFFO and SSRG through the date of the Change in Control. If following a Change in Control, a grantee is terminated by the Company without Cause or by the grantee with Good Reason (as each is defined in the Plan), all unvested restricted stock will fully vest. Performance-based restricted stock earned during 2019 and 2018 were 15,025 shares and 27,613 shares, respectively.

A summary of the Company’s performance-based restricted stock grant activity is as follows:

|  |  |  |  |  | Weighted-Average |
|  |  |  |  |  | Grant-Date |
Performance-based Stock Grants |  | Stock |  |  | Fair Value |
Unvested at December 31, 2018 |  |  | 15,025 |  |  | $ | 4.42 |
Granted |  |  | 27,613 |  |  | $ | 4.16 |
Vested |  |  | (14,899 | ) |  | $ | 4.33 |
Unvested at December 31, 2019 |  |  | 27,739 |  |  | $ | 4.21 |

Forfeitures are accounted for as they occur, compensation cost previously recognized for an award that is forfeited because of a failure to satisfy a service or performance condition is reversed in the period of the forfeiture.

14. COMMITMENTS AND CONTINGENCIES

The Company enters into contracts that contain a variety of representations and warranties and which may provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown as it involves future claims that may be made against the Company under circumstances that have not occurred.

15. SUBSEQUENT EVENTS

On March 26, 2020, the Company approved restricted share awards under the Plan to certain of its officers and employees in the aggregate amount of 28,755 shares, of which 15,025 shares are performance-based grants and the remainder of the shares are time-based grants. Between 0% and 200% of these shares will be earned based on achievement of the AFFO and SSRG goals in 2020, and the shares which are earned will remain subject to quarterly vesting during the remaining four-year time vesting period. Dividends paid by the Company prior to the

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determination of how many shares are earned will be retained by the Company and released only with respect to earned shares. If a Change in Control (as defined in the Plan) occurs during 2020, the number of shares earned wi ll equal the greater of the number of shares granted and the number of shares which would have been earned based on the AFFO and SSRG through the date of the Change in Control. If following a Change in Control, a grantee is terminated by the Company withou t Cause or by the grantee with Good Reason (as each is defined in the Plan), all unvested restricted shares will fully vest.

On March 2, 2020, the Company declared a cash dividend of $0.065 per common share payable on March 31, 2020 to stockholders of record as of March 16, 2020.

On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries, such as transportation, hospitality and entertainment. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID-19 presents material uncertainty and risk with respect to the to the Company's business, financial condition, results of operations and cash flows, such as the potential negative impact to occupancy at its properties, financing arrangements, increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. Accordingly, the Company cannot predict the extent to which its financial condition and results of operations will be affected at this time.

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GLOBAL SELF STORAGE, INC.

SCHEDULE III

REAL ESTATE AND RELATED DEPRECIATION

December 31, 2019

|  |  |  |  |  |  | Initial cost |  |  |  |  |  |  | Gross Carrying Amount at December 31, 2019 |  |  |  |  |  |  |  |  |
Description |  | Square Footage |  |  |  | Land |  |  | Buildings & Improvements |  |  | Costs Subsequent to Acquisition |  |  | Land |  |  | Buildings & Improvements |  |  | Total |  |  | Accumulated Depreciation |
Clinton, CT (B) |  |  | 30,408 |  |  |  | $ | 356,040 |  |  | $ | 3,108,285 |  |  | $ | 14,197 |  |  | $ | 356,040 |  |  | $ | 3,122,482 |  |  | $ | 3,478,522 |  |  | $ | 232,486 |
Bolingbrook, IL (A) |  |  | 113,700 |  |  |  |  | 633,914 |  |  |  | 5,491,409 |  |  |  | 2,439,850 |  |  |  | 633,914 |  |  |  | 7,931,259 |  |  |  | 8,565,173 |  |  |  | 798,681 |
Dolton, IL (A) |  |  | 86,590 |  |  |  |  | 614,413 |  |  |  | 5,227,313 |  |  |  | 9,611 |  |  |  | 614,413 |  |  |  | 5,236,924 |  |  |  | 5,851,337 |  |  |  | 558,103 |
McCordsville, IN (B) |  |  | 82,011 |  |  |  |  | 770,000 |  |  |  | 6,776,000 |  |  |  | 46,578 |  |  |  | 770,000 |  |  |  | 6,822,578 |  |  |  | 7,592,578 |  |  |  | 556,094 |
Merrillville, IN (A) |  |  | 80,570 |  |  |  |  | 597,229 |  |  |  | 5,104,011 |  |  |  | 464,324 |  |  |  | 597,229 |  |  |  | 5,568,335 |  |  |  | 6,165,564 |  |  |  | 565,840 |
Millbrook, NY (B) |  |  | 12,676 |  |  |  |  | 423,960 |  |  |  | 2,900,895 |  |  |  | 56,250 |  |  |  | 423,960 |  |  |  | 2,957,145 |  |  |  | 3,381,105 |  |  |  | 203,530 |
Rochester, NY (A) |  |  | 68,106 |  |  |  |  | 571,583 |  |  |  | 5,227,630 |  |  |  | 12,983 |  |  |  | 571,583 |  |  |  | 5,240,613 |  |  |  | 5,812,196 |  |  |  | 517,652 |
Lima, OH (B) |  |  | 98,265 |  |  |  |  | 530,000 |  |  |  | 4,664,000 |  |  |  | 99,237 |  |  |  | 530,000 |  |  |  | 4,763,237 |  |  |  | 5,293,237 |  |  |  | 395,563 |
Sadsburyville, PA (A) |  |  | 78,847 |  |  |  |  | 462,749 |  |  |  | 5,146,579 |  |  |  | 28,362 |  |  |  | 462,749 |  |  |  | 5,174,941 |  |  |  | 5,637,690 |  |  |  | 544,462 |
Summerville, SC (A) |  |  | 74,500 |  | (1) |  |  | 345,160 |  |  |  | 2,989,159 |  |  |  | 5,475 |  |  |  | 345,160 |  |  |  | 2,994,634 |  |  |  | 3,339,794 |  |  |  | 300,260 |
Summerville, SC (A) |  |  | 43,210 |  | (2) |  |  | 188,766 |  |  |  | 1,605,405 |  |  |  | 14,725 |  |  |  | 188,766 |  |  |  | 1,620,130 |  |  |  | 1,808,896 |  |  |  | 163,201 |
West Henrietta, NY (B) |  |  | 48,250 |  |  |  |  | 628,251 |  |  |  | 5,229,481 |  |  | — |  |  |  | 628,251 |  |  |  | 5,229,481 |  |  |  | 5,857,732 |  |  |  | 16,074 |
|  |  | 817,133 |  |  |  | $ | 6,122,065 |  |  | $ | 53,470,167 |  |  | $ | 3,191,592 |  |  | $ | 6,122,065 |  |  | $ | 56,661,759 |  |  | $ | 62,783,824 |  |  | $ | 4,851,946 |

(A) | This property is held as collateral under the Loan Agreement with an outstanding balance of $19,338,556 as of December 31, 2019.

(B) | This property is held as collateral under the Revolver with an outstanding balance of $4,914,000 as of December 31, 2019

(1) | SSG Summerville I LLC.

(2) | SSG Summerville II LLC

Activity in storage properties during the years ended December 31, 2019 and 2018 is as follows:

|  | 2019 |  |  | 2018 |
Storage properties * |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | 57,467,957 |  |  | $ | 57,303,425 |
Acquisitions and improvements |  |  | 7,364,681 |  |  |  | 164,532 |
Balance at end of period |  | $ | 64,832,638 |  |  | $ | 57,467,957 |
Accumulated depreciation |  |  |  |  |  |  |  |
Balance at beginning of period |  | $ | (3,656,220 | ) |  | $ | (2,257,862 | )
Depreciation expense |  |  | (1,424,265 | ) |  |  | (1,398,358 | )
Balance at end of period |  | $ | (5,080,485 | ) |  | $ | (3,656,220 | )
Storage properties, net |  | $ | 59,752,153 |  |  | $ | 53,811,737 |

* | These amounts include equipment that is housed at the Company’s properties and construction in progress which is excluded from Schedule III above.

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